Housing Market Shows Positive Signs Amid Fed Meeting and Volatility Despite the fact that the Federal Reserve (Fed) continues to purchase mortgage bonds and has not changed their current outlook, investors’ perception on future actions from the Fed have caused a volatile situation in the economic and housing markets. At the Fed meeting last Wednesday, Federal Reserve Chairman Ben Bernanke gave the world a basic lesson in economics when he announced that the Fed will reduce stimulus accommodations as the economy begins to shows steady signs of improvement. Bernanke told the world that IF the data continued to show positive signs, the Fed COULD begin tapering back asset purchases later in 2013 and be finished by the summer of 2014. Market participants ignored the IF and COULD and focused on the dates Bernanke spoke of instead, which led to mass sell-offs and concerns of a possible housing “bubble” on the horizon. Recent data however, indicates positive housing signs as pending home sales have risen as well as contracts to purchase previously owned homes in the U.S. Even with rising mortgage rates, economists have deemed the housing market as “stable” due to the increase in home prices and home affordability. As home prices continue to bounce back, sellers will be more willing to actually sell their homes which in turn will increase the housing inventory that has been relatively as of late. This is good news for homebuyers who are looking to take advantage of still historically low mortgage rates.
Posted on: Thu, 27 Jun 2013 20:11:51 +0000
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