A senior Federal Reserve official has warned the US cannot afford a “boom and bust cycle” in the housing market that would threaten financial stability, in a sign of growing concern over rising property prices at the central bank.
“It’s very important for us to get back to our 2 per cent inflation target but the goal is for that to be sustainable,” Eric Rosengren, the president of the Boston Fed, told the Financial Times. “And for that to be sustainable, we can’t have a boom and bust cycle in something like real estate.
“I’m not predicting that we’ll necessarily have a bust. But I do think it’s worth paying close attention to what’s happening in the housing market,” he said.
According to data released by the National Association of Realtors last week, the median price for sales of existing homes was up 23.6 per cent year-on-year in May, topping $350,000 for the first time.