Rising Rates Threaten Housing Recovery

Rising interest rates have already impacted mortgage refinancings and could undermine the housing recovery, according to a senior economist at Wells Fargo & Co. "Just as we are hitting bottom in the housing market, there is a lot of uncertainty about how strong the recovery will be," said Scott Anderson, senior economist at Wells Fargo. The May jobs report shows that job losses slowed to 345,000 a month, compared to 700,000 during the winter. "It's a good sign and it bolsters the argument the housing market should bottom in terms of sales and perhaps in starts" possibly in June or July, he said. However, the Federal Reserve is struggling to keep mortgage rates low, he said. Refinancing activity has dropped off. "Home purchase activity could wallow at moribund levels," Mr. Anderson said.