CAP en Español
Small CAP Banner

Idea of the Day: Reaching the Debt Ceiling Would Not Be Good News for the Housing Market

  • print icon
  • SHARE:
  • Facebook icon
  • Twitter icon
  • Share on Google+
  • Email icon
idea light bulb

Another looming showdown over the debt ceiling—the amount the federal government can borrow without further congressional approval—could derail one of the few bright spots in our fragile economic recovery: the housing market.

If conservatives in Congress refuse to allow the government to honor its financial obligations by borrowing money, investors will likely lose faith in the government and demand higher interest rates for Treasury bonds. Those bonds are the benchmarks for many other U.S. interest rates, including many mortgage rates. That means the cost of borrowing money to buy a house will increase, which could depress the housing market and slow our economic recovery.

The housing market accounts for only 3 percent or 4 percent of total U.S. spending, but it has a disproportionate importance to economic recovery. Spending on new homes typically rises quickly in a recovery because households usually feel more upbeat about their own prospects at the start of a recovery than during the preceding recession. These households then start to put more money into longer-term projects such as buying a new home. These actions ripple through our economy in forms such as more construction and construction-related jobs and increased spending on other items such as furniture and household appliances.

For more on this topic, please see:

To speak with our experts on this topic, please contact:

Print: Katie Peters (economy, education, poverty, Half in Ten Education Fund)
202.741.6285 or

Print: Anne Shoup (foreign policy and national security, energy, LGBT issues, health care, gun-violence prevention)
202.481.7146 or

Print: Crystal Patterson (immigration)
202.478.6350 or

Print: Madeline Meth (women's issues, Legal Progress, higher education)
202.741.6277 or

Spanish-language and ethnic media: Tanya Arditi
202.741.6258 or

TV: Lindsay Hamilton
202.483.2675 or

Radio: Chelsea Kiene
202.478.5328 or


This is part of a regular column: Idea of the Day

For more from the same column, click here