U.S. housing strategist at Morgan Stanley, James Egan, appeared on Stocks in Translation to explore why the housing sector hasn't experienced the same relief as other sectors despite restrictive monetary policies benefiting other parts of the economy.

“Home prices haven't come down [from] record highs. But if you look at housing activity… sales volumes, starts, the types of actual housing numbers that feed into GDP, for instance. Those have fallen significantly,” Egan explained.

Egan attributes this to the “lock-in effect,” when homeowners are reluctant to sell their homes don’t due to rising interest rates or changes in laws or regulations.

The other part of this is rent. “65% of the country are homeowners, 35% are renters. Rents are largely what go into the shelter inflation numbers that we're talking about here.”

Egan goes on to point out the challenges for first-time buyers. “You mentioned first-time homebuyers. Not a lot of inventory, that inventory is very unfordable… [so] you have a renter base that has to keep renting year-over-year and that, we think, that could be providing some upward pressure to that rent number.”

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This post was written by Neil Mulcahy.