Economy

WASHINGTON (Reuters) -Sarah Bloom Raskin ended her bid to become the top bank regulator at the Federal Reserve on Tuesday, one day after Democratic Senator Joe Manchin said he would not support her, citing worries she would discourage banks from lending to oil and gas companies. With Raskin informing President Joe Biden she was withdrawing her name from consideration, according to a source familiar with the matter, the administration is now on the hunt for a possible replacement. Here are the candidates likely to be in the mix, according to analysts and Washington insiders. RAPHAEL BOSTIC, ATLANTA FED PRESIDENTWith his appointment as president of the Atlanta Fed in 2017, Bostic became the first Black person to hold a regional Fed president role. He has been outspoken on racial diversity and economic inequality issues, both of which are key policy priorities for the Biden administration. An economist by training, Bostic previously held roles at the U.S. central bank in Washington, where he won praise for his work on community lending rules, and at the U.S. Department of Housing and Urban Development. However, Bostic represents a bit of an unknown regarding financial regulation, analysts said. Even so, some banks were keen on Bostic for the role when his name was first floated last year, according to two industry executives. A spokesperson for Bostic did not immediately provide comment.NELLIE LIANG, TREASURY UNDERSECRETARYLiang, a former Fed official who is now Treasury’s undersecretary for domestic finance, was instrumental in building the regulatory framework after the 2007-2009 recession and financial crisis. She spent decades at the Fed as a staffer, ultimately becoming the first director of the central bank’s Division of Financial Stability.She left the Fed in 2017 to join the Brookings Institution think tank, where she criticized Republican efforts to trim capital and liquidity requirements for large banks, among other changes. Liang was nominated for a seat on the Fed’s Board of Governors during the Trump administration, but she withdrew in 2019 after Republicans blocked her nomination over worries she would be too tough on Wall Street.However, some progressives are unhappy that Liang has not taken a tougher stance on cryptocurrencies, “so it is unclear whether she would be in any future conversation about this role,” Isaac Boltansky, policy director for brokerage BTIG, wrote in a note on Monday. A spokesperson for Liang did not immediately respond to a request for comment.MICHAEL HSU, ACTING COMPTROLLER OF THE CURRENCYCurrently acting comptroller of the currency, Hsu previously led big bank supervision at the Fed. In his current role, he has pushed Democratic priorities, including climate change risk and has warned banks against “over-confidence” https://www.reuters.com/world/us/us-banking-regulator-cautions-firms-against-overconfidence-following-pandemic-2021-05-18 coming out of the COVID-19 pandemic. While he would be a good fit for Fed supervision, Washington insiders said, it’s unclear if his stance on climate financial risk would be palatable to Manchin, a moderate who represents coal-producing West Virginia in the Senate.A spokeswoman for Hsu did not immediately respond to a request to comment.FORMER TREASURY UNDERSECRETARY MARY MILLERA new name floated on Monday was Mary Miller, who was at the Treasury from 2010 to 2014. She recently served as the interim senior vice president for finance and administration at Johns Hopkins University.During her stint at the Treasury, Miller was responsible for Treasury debt management, fiscal operations, and the recovery from the financial crisis. She played a central role in implementing the 2010 Dodd-Frank financial reform law, helping agencies write complex regulations like the “Volcker Rule” and standing up the new Financial Stability Oversight Council. Miller could not immediately be reached for comment.RICHARD CORDRAY, FORMER HEAD OF THE CONSUMER FINANCIAL PROTECTION BUREAU (CFPB) A former Ohio attorney general, Cordray served as the first director of the CFPB. Under his leadership the agency took an aggressive stance in going after abusive mortgage and payday lenders, earning praise from progressives and criticism from Republicans who said he was overstepping the agency’s statutory remit.After leaving the agency, Cordray ran unsuccessfully for Ohio governor. He currently runs the Education Department’s federal student aid programs. Cordray was in the running for the supervision post late last year, Reuters reported. Cordray did not respond to a request for comment. More

The head of Delta Air Lines has said that higher ticket prices await flyers as a result of the rising cost of oil, in another sign of inflationary pressures seeping into the economy. Ed Bastian, Delta chief executive, said in an interview that the third-largest US carrier would add a fuel surcharge to international flights “as the market conditions permit”. Higher fuel costs “will no question” raise ticket prices, both domestically and internationally, he said. His comments come after jet fuel prices rose sharply after Russia invaded Ukraine last month. While it has partially receded, jet fuel remains about two-thirds higher than a year ago. Glen Hauenstein, Delta president, said at an industry conference earlier on Tuesday that the airline needs “to recapture somewhere between $15 and $20 each way on an average ticket value of about $200”, and that the company is confident passengers will be willing to pay it. Bastian told the Financial Times that customers continued to book flights despite uncertainty over fuel costs and the war in Ukraine. While Delta’s bookings for transatlantic flights fell between 5 and 10 per cent in the week following the invasion, Delta had its biggest ever day of sales last week.The positive outlook was shared by Shai Weiss, chief executive of Delta’s joint-venture partner Virgin Atlantic, who said that sales have snapped back after taking a hit at the start of the war. Bastian saw no signs US consumers have been put off travelling. “As the conflict continues, there could be an element of caution. But we’re not seeing any significant impact,” he said. Delta said that in the first quarter it had 83 per cent of seat capacity compared to 2019, before the pandemic. The Atlanta-based airline forecast a pre-tax quarterly loss but a profit for the month of March.

“It’s a little early to tell what’s going to happen to oil prices and consumer demand over the summer. You’d never want to be in a position of cutting capacity when you’re having such robust demand,” Bastian said. He said that business travel has returned to 60 per cent of normal levels and “is continuing to push upwards” from the depths of the pandemic. Delta is prepared for a fifth of its large corporate business to disappear entirely, but expects premium leisure travellers to replace it.United Airlines said on Tuesday that it would cut its planned 2022 seat capacity, partly due to rising fuel prices. American Airlines on Tuesday reduced its first-quarter capacity forecast, but said that revenue has improved because of stronger travel demand. More

Federal Reserve officials are set to raise interest rates to control inflation, but the return to normal they had hoped to see remains painfully elusive.WASHINGTON — When Federal Reserve officials raise interest rates on Wednesday, they will do so amid an unfortunate economic reality: Many of the inflationary pressures they had long assumed would dissipate have instead lingered, and some are getting worse.Central bankers have consistently underestimated how high inflation would rise, and how long it would last, as the economy has surged back from pandemic shutdowns. They will release a fresh set of quarterly economic projections Wednesday, in which they are likely to raise their inflation forecasts for the fifth time in a row.Like many private sector forecasters, the Fed misjudged how strong American demand would be for goods and how long that demand would help to keep global supply chains running behind schedule, forces that have combined to push up consumer prices.Officials spent much of the past year expecting a relatively quick return to some pandemic-infused version of normality, but backlogged factories, crowded ports and overburdened trucking companies are still failing to catch up. Repeated waves of the virus have exacerbated the problems, which along with rising wages and services prices have sent inflation higher. Consumer price gains hit a new 40-year high in February, pushed up by rising prices for food, rent and gas.Now, as Fed officials prepare to begin a series of interest rate increases to try to bring inflation under control, they again appear to be aiming at a moving target. Supply chains that showed signs of improvement in January and February are being thrown further into disarray by the Russian invasion of Ukraine and sweeping lockdowns in China, developments that promise to lengthen delivery times and add to prices.The war, at the nexus of Europe and Asia, has scrambled flights and ocean shipments; threatened supplies of palladium, nickel and wheat; and sent energy prices soaring, further fueling inflation. Automakers have shuttered factories because of a shortage of parts, and Russia has answered back to sweeping sanctions imposed by the West by announcing its own plans for export controls.In recent days, Chinese cities and provinces have imposed extensive lockdowns to try to stop the spread of the Omicron variant. Shenzhen, a hub of electronics manufacturing and a vital port that is home to 17 million people, announced a lockdown on Sunday night for seven days. Foxconn, a Taiwanese electronics firm that supplies Apple from factories there, said it would suspend operations. Further restrictions in China, home to more than a quarter of global manufacturing, are likely to reverberate through already-tangled supply chains and exacerbate inflation.“The question is whether this is going to be bad or very bad,” Phil Levy, chief economist at the logistics company FlexPort, said of the Chinese shutdowns in particular. He noted that this disruption came when shipping delays were already extreme.“If things get gummed up there, it will reverberate through the whole system,” he said, adding that it matters how long and how sweeping the shutdown proves. “These problems just build.”Mary Lovely, a senior fellow at the Peterson Institute for International Economics, said it was “hard to overstate” the importance of Shenzhen and its surrounding area for electronics, as well as for other industries, like metals, furniture and paper products.“I think it’s definitely going to have effect on supply chains,” she said. She added that she expected those pressures to translate more readily into increased prices than they did earlier in the pandemic.“Now we’re in a period with higher inflation, I think that suppliers may find it easier to pass those costs along, or take this opportunity to raise prices,” Ms. Lovely said.Fed officials have held interest rates near zero since March 2020 and are expected to raise them for the first time since 2018 on Wednesday. By making money more expensive to borrow and spend, the Fed is hoping to cool down demand and beat back inflation — helping conditions to even out when a return to “normal” has been painfully, and consistently, elusive.Quarantine workers in Shanghai on Monday. Further restrictions in China, home to more than a quarter of global manufacturing, are likely to exacerbate inflation and tangled supply chains.Qilai Shen for The New York TimesFed policymakers and Wall Street researchers alike thought that prices would fade as consumers began shifting their spending from imported goods back to movies, vacations and restaurants. That shift would help factories and shipping routes catch up with surging demand, as used car prices — which spiked last year — moderated. Those trends either haven’t happened, or they have been canceled out by increases in the prices of other products and services.Jason Furman, an economist at Harvard University, said many forecasters had been doing what investors sometimes refer to as “pricing to perfection”: assuming that everything is going to go well, even if that is not the most likely outcome.“You can look at the individual items: There’s been a lot of: What if inflation in X, Y, Z goes down?” he said. “And not: What if inflation in A, B, C goes up?”Many of the factors prompting economists to mark up their inflation forecasts now are not even tied to supply chains.Matthew Luzzetti, chief U.S. economist at Deutsche Bank, recently revised up his inflation projections because rent costs are rising so rapidly in the Consumer Price Index. Between that and wage growth, he thinks, high inflation will last unless the Fed intervenes.“For a while, inflation forecasters had been anticipating that the goods side of things would return to more normal dynamics” just as service prices, like rent, began to increase, he said. Services prices have indeed picked up, but normalization in good prices keeps getting “pushed out.”Consumers continue to spend a bigger share of their budgets on goods instead of services — purchases like travel and manicures — compared with before the pandemic. That has meant global producers are still struggling to keep up with demand. Even potentially short-lived disruptions, like the ones taking place in China, can add to a snowball of delays and shortages.Data released this month showed that the U.S. trade deficit hit a record in January, the height of the Omicron wave, in part because of surging imports of cars and energy. The average time to ship a container from a Chinese factory to a U.S. warehouse had stretched to 82 days in February, according to Freightos, a logistics platform, up from 45 days two years before.In many ways, the events of the past few years have been so unusual that few if any forecasters correctly predicted all of them. And Fed officials have acknowledged that they misjudged inflation last year, partly because they expected supply chains to recover more quickly.They are now striking a more wary tone.Jerome H. Powell, the Fed chair, told Congress this month that the war in Ukraine was “not going to help at all with supply chains.”“We haven’t seen much relief on the supply side,” he noted, explaining that he and his colleagues had been waiting for the strains to ease.Mr. Powell predicted that as the Fed raised interest rates this year, it would help cool off demand for car loans and mortgages, weakening spending in the economy and giving companies some room to catch up with demand. Central bankers are hoping that at the same time, the economy is “going back to normal” in terms of supply chains and the breakdown between goods and services, he said.Even so, he acknowledged that the Fed stood ready to act more aggressively if that didn’t happen.“We hope we’re getting help on the inflation front from a bunch of things,” Mr. Powell said. “In any case, we do have the responsibility to generate price stability, and we will use our tools to do that, over time.” More

(Reuters) – U.S. President Joe Biden said on Tuesday that Sarah Bloom Raskin had withdrawn as his nominee to become the top bank regulator at the Federal Reserve after being subjected to “baseless attacks from industry and conservative interest groups.””Despite her readiness — and despite having been confirmed by the Senate with broad, bipartisan support twice in the past — Sarah was subject to baseless attacks from industry and conservative interest groups”, Biden said in a statement released by the White House. More

Rishi Sunak is poised to present much improved forecasts for the public finances in his spring statement next Wednesday, adding to pressure on the chancellor to help Britons cope with the growing cost-of-living crisis.Very strong tax revenue growth in the financial year ending in March has already put public borrowing on course to be significantly lower than the Office for Budget Responsibility predicted at Sunak’s Budget last October.Then, the UK fiscal watchdog said the government would borrow £183bn in 2021-22. But the government is now on course to borrow only about £160bn following much better than expected tax receipts. The improved forecasts, while welcome in the Treasury, will intensify pressure on Sunak from Conservative and opposition MPs to increase help for households grappling with higher energy bills and surging inflation.Sir Keir Starmer, Labour leader, told the Financial Times that if Sunak chose to “sit on his hands” at the spring statement it would “send a strong signal to the British public about the lack of priority he gives to their real financial concerns”.Tory MPs are exerting most pressure on Sunak to follow other European countries including France, Ireland and the Netherlands by cutting fuel duty, as soaring petrol and diesel prices hit households and small businesses.“I think it’s inconceivable in these circumstances [Sunak] won’t cut fuel duty,” said Torsten Bell, chief executive of the Resolution Foundation think-tank, adding that he expected a cut of at least 5p a litre.Sunak told Tory MPs on Monday night that crude prices had dropped 20 per cent in a week, which would have more effect than anything else on fuel prices, but his allies declined to comment on the prospect of a duty cut.Treasury officials have in recent weeks been considering more far-reaching ways of helping households, including raising thresholds for payment of income tax or national insurance contributions.“Rishi’s desperate to cut taxes,” said one person briefed on the Treasury’s deliberations. However, the chancellor has also told colleagues he wants to wait if he can until the autumn before making big decisions on the cost-of-living crunch because of the volatility of world markets.The UK energy price cap, which rises from £1,277 to £1,971 in April, will offer some protection to households until October, when it could rise further to about £3,000. At that point Sunak would almost certainly have to go beyond the £9bn relief package he outlined last month.Treasury insiders said it would be “complicated” to explain the case for tax cuts now, when national insurance contributions are being increased by £12bn annually to fund efforts to cut record NHS waiting lists for hospital treatment as well as improve social care.Some Tory MPs want the national insurance rise to be shelved, but Sunak and Boris Johnson have jointly committed to pressing ahead with it next month. “Rishi asks us if we don’t want to cut hospital waiting lists,” said one Tory MP, whenever the issue is raised at private meetings.However Sunak does have more options than commonly assumed ahead of his spring statement on March 23, even if he is adamant that the event should not be seen as a full-scale Budget.Those who follow the public finances closely expect the OBR to predict next week that the good news on tax revenues will continue, allowing the chancellor to announce he has significant fiscal firepower.

Steffan Ball, chief UK economist at Goldman Sachs and a former economic adviser to Philip Hammond when he was chancellor, said the outlook for revenue was strong. “Employment is looking much better than it was last October, wage growth is likely to exceed 4 per cent for the whole of the year and at least some of the strong tax revenues we have been seeing are likely to persist,” he added. Sunak’s main fiscal rule on borrowing is to ensure the public finances are on track to run a surplus on the current budget, excluding net investment, in three years’ time.In the October Budget, the OBR’s forecasts showed Sunak was on course to have a £25bn current budget surplus in 2024-25. Ball now expects the OBR to predict that surplus to be between £45bn and £75bn, with the range reflecting the deep uncertainty over the outlook.The OBR’s new forecasts will take account of the effects of sharply rising oil and gas prices in the first week of Russia’s invasion of Ukraine. These are expected to push up wages and increase the cash size of the economy, known as nominal gross domestic product, thereby raising the tax revenue forecast further even though higher energy prices will depress real growth and prosperity. The OBR said at the October Budget that nominal GDP was “the key driver of tax revenues” and in its forecasts it underestimated its strength so far in 2021-22 by more than £40bn, helping to explain why tax revenues have been so strong. Aides to the chancellor have acknowledged the OBR forecasts will be stronger in the spring statement than many commentators have expected. Bell said there was likely to be a significant upgrade to the forecasts. “The economy is tax richer, reflecting higher wages, higher inflation and a bigger economy, but it is uncertain how much of these gains last and how much needs to be spent [by the chancellor] to deal with the problems that high inflation has brought,” he added. More

Citing sanctions, the Russian government warned it might pay foreign debt obligations in rubles. Credit rating agencies say a default is imminent. Russia is teetering on the edge of a possible sovereign debt default, and the first sign could come as soon as Wednesday.The Russian government owes about $40 billion in debt denominated in U.S. dollars and euros, and half of those bonds are owned by foreign investors. And Russian corporations have racked up approximately $100 billion in foreign currency debt, JPMorgan estimates.On Wednesday, $117 million in interest payments on dollar-denominated government debt are due.But Russia is increasingly isolated from global financial markets, and investors are losing hope that they will see their money. As the government strives to protect what’s left of its access to foreign currency, it has suggested it would pay its dollar- or euro-denominated debt obligations in rubles instead. That has prompted credit rating agencies to warn of an imminent default.The Russian currency has lost nearly 40 percent of its value against the U.S. dollar in the past month. Even if the payments were made, economic sanctions would make it difficult for Western lenders to access the rubles if they are in Russian bank accounts.“It is not that Russia doesn’t have money,” Kristalina Georgieva, managing director of the International Monetary Fund, told reporters last week. The problem is, Russia can’t use a lot of its international currency reserves, she said, because they have been frozen by sanctions. “I’m not going to speculate what may or may not happen, but just to say that no more we talk about Russian default as an improbable event.”Last week, the chief economist of the World Bank said Russia and Belarus were squarely in “default territory,” and Fitch Ratings said a default was imminent because sanctions had diminished Russia’s willingness to repay its foreign debts.Russia last defaulted on its debt in 1998, when a currency crisis led it to default on ruble-denominated debt and temporarily ban foreign debt payments. The crisis shocked the financial world, leading to the collapse of the U.S. hedge fund Long-Term Capital Management, which required Federal Reserve intervention and a multibillion-dollar bailout. If Russia failed to make payments on its foreign currency debt, it would be its first such default since the 1917 Russian Revolution.Foreign investor interest in Russian assets fell in 2014 when sanctions were imposed after the country annexed Crimea, and never fully recovered before more sanctions were imposed by Washington in 2019. But holdings aren’t negligible. Russian government bonds were considered investment grade as recently as a few weeks ago, and were included in indexes used to benchmark other funds. JPMorgan estimates that international investors own 22 percent of Russian companies’ foreign currency debt.BlackRock, the world’s largest asset manager, has already incurred losses on Russian assets and equities.Jeenah Moon/BloombergFunds managed by BlackRock, the world’s largest asset manager, have incurred $17 billion in losses on Russian assets, including equities, in recent weeks, according to the firm. The loss in value has a number of causes, including investors selling their holdings.But so far, regulators have said the risk to global banking systems from a Russian default wouldn’t be systemic because of the limited direct exposure to Russian assets. The larger ramifications from the war in Ukraine and Russia’s economic isolation are from higher energy and food prices.Still, financial companies have been scrambling to assess their exposure, according to Daniel Tannebaum, a partner at Oliver Wyman who advises banks on sanctions.“I’m seeing a lot of clients that had exposure to the Russian market wondering what type of default scenarios might be coming up,” said Mr. Tannebaum, who is also a former Treasury Department official. In the case of a default, “those bonds become worthless, for lack of a better term,” he said.On Monday, Russia’s finance minister, Anton Siluanov, accused the countries that have frozen the country’s internationally held currency reserves of trying to create an “artificial default.” The government has the money to meet its debt obligations, he said, but sanctions were hampering its ability to pay. Mr. Siluanov had also said over the weekend that the country had lost access to about $300 billion of its $640 billion currency reserves.The government insists investors will be paid. The finance ministry said on Monday it would send instructions to banks to issue the payment due on dollar- or euro-denominated bonds in dollars or euros, but if the banks don’t execute the order then it will be recalled and payment will be made in rubles instead. The statement also said that the payments could be made in rubles and then converted to another currency only when the country’s gold and foreign exchange reserves are unfrozen.Russia’s finance minister, Anton Siluanov, accused the countries that have frozen the country’s internationally held currency reserves of trying to create an “artificial default.”Alberto Pizzoli/Agence France-Presse — Getty Images“In any case, obligations to our investors will be met. And the ability to receive the funds in foreign currency will depend on the imposed restrictions,” Mr. Siluanov said.But the statement doesn’t provide a clear vision of what might happen on Wednesday. American sanctions allow for the receipt of payments of debt obligations until late May, and so the reasoning behind the Russian finance ministry’s claim that banks might refuse the payments is unclear. The payments due on Wednesday also have a 30-day grace period, so a default wouldn’t technically happen until mid-April. But Russia has already blocked interest payments on ruble-denominated bonds to nonresidents, a sign of its hesitancy to transfer funds abroad.While the Russian finance ministry said it could meet its obligations by paying in rubles, others disagreed.“In order to avoid a default, the only way that Russia can really navigate this is to send the full payment in dollars,” said Trang Nguyen, an emerging markets strategist at JPMorgan.Some Russian bonds issued in recent years do have provisions that allow for repayment in other currencies, including the ruble, if Russia can’t make payments in dollars for reasons “beyond its control.” The Russia-Ukraine War and the Global EconomyCard 1 of 6Rising concerns. More

(Reuters) – Brianna Lombardozzi finally has her finances to a point where she might be able to buy a house. But she isn’t feeling great about her odds. Lombardozzi, 37, used her federal stimulus checks and other savings built up during the pandemic to pay down the majority of her credit card debt – a move that helped her credit score rise by almost 100 points. But competition is intense for homes in her price range of $175,000 to $225,000 in Central, South Carolina, and she has had four bids rejected over the past month. Now with mortgage rates rising, she doesn’t know if she’ll find an affordable property before her lease is up at the end of May.”Right now, I feel a little defeated,” said Lombardozzi, who works in housing for a local university. As home prices soar, housing affordability is sinking to the lowest levels since 2008 and first-time buyers – who haven’t benefited from rising home values and are also coping with rising rents – are being squeezed out. First-time buyers accounted for 27% of existing home sales in January, according to the National Association of Realtors, near 2014 levels. With mortgage rates above 4%, around the highest in about three years, and expected to rise further, buyers on tight budgets may struggle even more to find homes they can afford. Graphic: First-time buyers squeezed out : https://graphics.reuters.com/USA-ECONOMY/HOUSING-AFFORDABILITY/lbpgnzelyvq/chart.png AFFORDABILITY STRAINED Demand for housing soared during the pandemic as buyers capitalized on record-low mortgage rates and remote workers sought more living space. Some people, like Lombardozzi, saved money they would have typically spent on travel or dining out while much of the economy was shut down, leaving them with more cash to potentially invest in a home. At the same time, the number of homes for sale plunged as some owners stayed put because of uncertainty and supply-chain disruptions and labor shortages slowed new home construction. While some imbalances are easing, the supply of homes for sale at the end of January was at a record low – only enough to last 1.6 months, NAR data shows. That is forcing buyers to compete over limited listings and pushing prices higher.At the end of 2021, housing affordability dropped to the lowest levels since November of 2008, with households earning the median income needing to spend nearly 33% of their income to afford payments on a median-priced home, according to the Atlanta Federal Reserve. Housing is generally viewed as affordable when households spend no more than 30% of their income on shelter. Affordability may be strained even further by rising mortgage rates. Some people who had been pre-approved for a mortgage may find they no longer qualify for the same maximum loan amount after mortgage rates rise, said Jennifer Beeston, a senior vice president of mortgage lending for Guaranteed Rate, a mortgage lender.First-time buyers are already struggling to compete with all-cash offers, including from institutional investors such as private-equity funds, which are taking up a greater share of purchases and are viewed as less risky by sellers, analysts say. Cash purchases accounted for 27% of sales in January, up from 19% a year earlier, according NAR. And some new buyers are being outbid by people with enough cash to pay above what a mortgage banker is willing to lend, based on the home’s appraised value, said Erica Barraza, a real estate broker in the Seattle area. Graphic: Home ownership becoming less affordable: https://graphics.reuters.com/USA-ECONOMY/HOUSING-AFFORDABILITY/klpykbydypg/chart.png BRACING FOR DISAPPOINTMENTMany prospective home buyers find they need to increase their budgets or lower their standards just to have a chance at a winning bid. They also have to move fast, viewing homes the day they go on the market and making offers within a day, or minutes after the viewing. Those conditions are hitting morale: A survey by Fannie Mae found just 29% of respondents think it’s a good time to buy a home, near a record low for a series launched in 2010. “What I spend 50% of my time doing now is pep talks,” said Beeston, who works in mortgage lending. Jason Harrison and Jamar Haggans are just getting started with their home-buying search, but they are already lowering expectations. Their search for a three-bedroom, two-bathroom house in Kansas City, Missouri, priced under $450,000 turns up only 10 to 20 new houses daily. Many of them sell within a day or two – often well above the asking price. After reviewing the quality of homes listed, they upped their budget by $75,000 and are nervous about over-paying. “My biggest fear right now…is that if we want to get a home we’re going to have to pay more than it’s actually worth,” said Harrison, 36. Harrison and Haggans are not willing to waive home inspections or appraisals, which they worry will make them less appealing than buyers willing to make those concessions. They hope more people will list their homes in the spring. Delaying a home search also has costs for buyers facing rising rents. Lombardozzi, who lost at least one bid to an all-cash offer, estimates she has about a month to find a home before she needs to start looking for rentals. The house she’s been renting for six years was recently sold, and she says comparable rentals are going for 20% to 40% more than what she is paying now. She first started searching for homes in January, and Mortgage Bankers Association data shows home-loan costs have climbed roughly three-quarters of a percentage point in that window, reducing how much she can borrow if she wants to keep the monthly mortgage payment at a level she can afford. “By the time I might actually get an offer accepted, what will the rates have gone up to?” she said. “Will I just not be able to buy a house period?” More