Construction workers finish a roof in Chicago.(Photo: Nam Y. Huh, AP)
Savers and those who rely on bond market returns for income despise
the ultra-low interest rates the Federal Reserve has kept in place since
If you're a home builder, you probably love them, and
Wednesday's housing starts number for November, due out at 8:30 a.m. ET,
likely will reflect the ongoing benefits of low interest rates for the
The Fed lowered short-term interest rates nearly
to zero in the wake of the 2008 financial crisis and likely will keep
them there for another year, which is why savings rates are so low, and
why the Fed is so unpopular with savers.
Indirectly, the Fed has
also helped push down long-term interest rates, which means the average
30-year fixed-rate mortgage is at a record low 3.32%. If you were bought
a median-priced home - half costing more, half less - at $186,100, your
principal and interest payment would be $817 a month.
mortgage rates have boosted demand for houses, precisely what the Fed
hoped to achieve to help a struggling economy three years into
Maury Harris, economist at UBS Investment
Research, expects 900,000 housing starts for November, vs. 894,000 in
October. That's still a far cry from the average 2.68 million housing
starts in 2006, but stunningly better than 2009's 554,000.
demand for new houses has helped boost sale prices of existing houses.
It's a virtuous cycle -- when people can sell their homes at a profit,
they're able to afford and buy pricier homes.
All that building
and home buying is a welcome development for homeowners and Realtors.
Homeowners looking to sell have a better shot at success. Homeowners
wanting to stay where they are feel wealthier because the value of their
biggest asset has rebounded so they go out and spend more.
it means job creation in the hard-hit construction industry. When
unemployment declines, more people have the paychecks to buy homes and
increase their buying of goods and services.
It's likely Fed
policy-makers couldn't be happier, and though it won't happen in the
next few months, it moves the date closer that the Fed will finally
raise rates and give some relief to long-suffering savers and bond