Optimism is high for many sectors of the US economy in 2025, but one area that has fallen since the election is construction. That coincides with better economic data since September and a rise in 30-year bond yields.

There is a psychological barrier of 7% that scares away American home buyers and we are now dangerously close to it.

Housebuilders can accept lower margins and that is slowly happening now, but there is some reluctance and nobody likes to see house prices fall. This is a dynamic worth watching as it is a large part of the economy and has been percolating for some time. Much of the buying in the last two years has been based on falling rates later but that no longer seems so likely.