Hopes for the first wave of interest rate cuts to come in early 2024 are fading as Federal Reserve officials signal higher for longer rates. Stifel Director Andrew Carter joins Yahoo Finance Live to discuss the greater implications for the housing market.

Carter notes higher rates could constrain "housing turnover," and that construction may "continue to throttle existing home sales" as rates rise.

However, he sees new home sales "continuing to do well" by slowly cutting excess inventory as affordability issues persist.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith

Video Transcript

SEANA SMITH: Well, hopes of a March rate cut are dwindling as Fed officials brace for and brace investors for the possibility of a higher-for-longer rate environment. So just this week, we've heard from Fed President Neel Kashkari. Also Austan Goolsbee echoing the cautious sentiment that came out from Powell last week and over the weekend on his interview for 60 minutes.

Related Videos

Now, one sector that will be and has been heavily impacted by rising rates or the higher rates for longer is housing. Mortgage rates climbing along with the Fed funds rate until they tipped over 7%. Now they're steadily returning to Earth just a bit though, but lots of questions about where we go from here. So let's talk about it.

We have Andrew Carter. He's a director at Stifel. Andrew, it's good to see you here. So we've heard it from a number of Fed officials. We heard it from Powell himself that it's very unlikely we're going to get a rate cut here in March. What does that mean then for housing?

ANDREW CARTER: Yeah, I guess for housing is and one of the-- one of the issues with housing is it's driven by-- or home-- or home improvement, let me be clear, therefore housing kind of where the implications are is you need housing turnover. That's probably going to still be anemic. Even with some rate relief, we've been in the camp that existing home sales would be kind of lethargic. That's going to temper the amplitude of-- of the recovery, and then also the separate side of it is projects that are financed. 29% of projects over $30,000 are financed in some forms. So those two things are going to hit home improvement. Back to your question around housing, it's going to probably really lead to continue to throttle existing home sales.

BRAD SMITH: And so as we're looking across the entire sector here, what does that spell out then for some of the new home sales, where-- where building is still taking place, but we're even seeing some of that specking activity start to moderate a little bit?