Housing Credit Crunch

Archive Report

Effect of Tight Money on Home Buying

Impact of High Interest Rates on Home Building

Housing is traditionally the first major industry to be hurt by high interest rates and a shrinking money supply. The year 1973 shows no sign of breaking with this tradition. The cost of borrowing has climbed to record and near-record levels, draining money from those savings institutions that are the chief sources of credit for home builders and home buyers. The resulting scarcity of mortgage financing has caused a decline in new construction and has added to the difficulties being encountered by American families looking for homes of their own.

The National Association of Home Builders (NAHB) calculates that 3.4 million potential buyers are removed from the market every time interest rates ...

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