Fourth Quarter GDP (Advance) Economy
links for 2008-01-31

Four Months from Mortgage Rate Changes to Changes in Home Sales

Jim Hamilton writes:

Econbrowser: Fed rate cut: although interest rates respond immediately to the anticipation of any change from the Fed, it takes a considerable amount of time for this to show up in something like new home sales, due to the substantial time lags involved for most people's home-purchasing decisions. The graph below gives my estimate of the average time delay between a change in the mortgage rate and a subsequent change in the number of new home sales. According to the historical correlations, we would expect the biggest effects of the January interest rate cuts to show up in home sales this April.

Econbrowser: Fed rate cut