GO
Loading...

The risk of rising rates on housing

Rising interest rates could slow the housing recovery, Bank of America Merrill Lynch Senior U.S. Economist Michael Hanson said Monday.

"It clearly is a risk to the housing outlook because everybody's looking for housing, basically, to be the engine of growth going forward, and it's obviously showing some early signs of pulling back. No surprise in the fact that interest rates are a bit higher," he said.

"I don't think we're fundamentally looking at the housing market stopping a recovery, but I think the pace is going to slow a bit."

(Read more: Expect 'significant' September boost: Jon Najarian)

Hanson, a former economist for the Federal Reserve, said that the sector has better days ahead, factoring in such things as pent-up demand.

"Housing is in the early stages of a multiyear recovery," he said on CNBC's "Fast Money."

"You want to look at sort of a feel for what overall demand is going to be, so rates are one part of the affordability story."

(Read more: Pandora a 'buy' on momentum: Stephen Weiss)

Hanson said that rising interest rates might have an immediate effect on the market but not buyers, noting that a move of 50 basis points might mean an extra $60 to $100 in a homebuyer's monthly mortgage payments.

"That's going to take some people out of the market, but that's not going to fundamentally stop the recovery in housing," he added.

Hanson also said that the Fed appeared unlikely to begin September tapering of its $85 billion-per-month asset purchases.

(Read more: Tesla stock in 'bubble territory': Weiss)

"The data are not supporting strongly a rush for taper," he said.

By CNBC's Bruno J. Navarro. Follow him on Twitter @Bruno_J_Navarro.

— CNBC's Michael Newberg contributed research to this report. Follow him on Twitter: @MikeNewberg.

Contact Fast Money

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET

Halftime Report

  • Bill Nygren, Oakmark Fund, explains why Apache, Bank of America and Google will be winners in 2015.

  • Nick Tiller, Sustainable America founder and chairman, tells CNBC's Kate Kelly oil prices are poised for a tradable rally. Tiller likes the Brent ETF and energy sector.

  • Discussing interesting trends contributing to the market's rally into year's end, with the FMHR trader Josh Brown and Dan Greenhaus, BTIG.