Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

Absolutely. We have a very mild upturn in home sales as overall activity and income recover from this soft period, but we do not get the normal kind of pop in housing. What is unusual, in part, about this cycle is that, in past cycles, monetary policy was partly responsible for driving the decline of demand and then a much easier monetary policy drove a more significant upturn in sales, and that was an important element in bringing about balance. You had part of the adjustment coming from lower production and part of it being driven by much faster increases in demand as interest rates fell. In our forecast, mortgage rates are drifting up a little from here, so we do not really see the conditions that will generate a substantial turnaround in sales that might work off this margin of unsold homes more through the demand side. But obviously that could still happen.

Keyboard shortcuts

j previous speech k next speech