Federal Reserve Chair Janet Yellen is upbeat on the U.S. economy for the most part, but there’s one sector that causes her some concern: Housing.
“One cautionary note, though, is that readings on housing activity — a sector that has been recovering since 2011 — have remained disappointing so far this year and will bear watching,” she told the Joint Economic Committee in prepared remarks Wednesday.
The housing sector was a key part of the economic recovery last year but has since fallen short of economists’ expectations.
Building permits — a gauge of future home construction — fell 2.4% in March, and existing home sales were flat. Economists had expected both these indicators would improve more, especially after blizzards and a cold winter put the housing sector largely on hold.
Yellen cautioned that the warmer weather may not be enough to turn things around.
“The recent flattening out in housing activity could prove more protracted than currently expected rather than resuming its earlier pace of recovery,” she said.