The Housing Market Catches the Fed's Attention

                                                           

The heat emanating from the U.S. housing market has the attention of at least some of the folks at the Federal Reserve.   View in browser   July 07, 2021   Today's Top Stories From the Breitbart News Desk The heat emanating from the U.S. housing market has the attention of at least some of the folks at the Federal Reserve. The minutes of the June meeting revealed that "several" Fed officials think there would be benefits to begin the eventual taper of bond purchasers by reducing the mortgage-backed securities buying faster than Treasuries. The reason for this, in the gentle language of the minutes, is to ease "valuation pressures in housing markets." At the end of June we got the S&P CoreLogic Case-Shiller National Home Price Index for April showing a gain of 14.6 percent compared with a year prior, the fastest pace on record and acceleration from the 13.3 percent annual gain in March. By all accounts, home prices have continued to accelerate. Indeed, Fed staffers reported to officials that "Housing demand continued to be robust, with construction of single-family homes and home sales remaining well above their pre-pandemic levels and house prices rising appreciably further. The incoming data for this sector indicated that residential investment spending was being temporarily held back in the second quarter by materials shortages and limited stocks of homes for sale." Residential investment spending is Fed-speak for construction spending. In the jargon of the Fed, building new homes counts as investment but buying an existing home does not. So what the Fed staff is saying is that home prices will likely keep rising because home building has been held back because of shortages and inflation. And even though this week's mortgage applications numbers suggested that the high prices of homes are slowing down sales, Ed Pinto of the AEI Housing Center points out that we're still far above pre-pandemic levels. Indeed, purchase volume was 36 percent above the same week in 2019 and at about the same level as in 2020. All of this has some people beginning to worry that we may be in a new housing bubble. Won't the panic buying of the pandemic retreat with the virus? Certainly, home prices cannot continue to rise nearly 15 percent a year for very long. But many of the fundamentals that are driving what we've been calling the "flight to the suburbs" for over a year are not going to go away soon. The cities are likely to see further deterioration as schools slump, the shrinking tax base erodes funding for services, and crime escalates. Remote working, even if only part-time, makes longer commutes more tolerable. And people have discovered, once again, that it's nice to live in a house with a yard. Pinto estimates that we will continue to see double digit levels of home price appreciation through the end of this year and into next year. That sounds about right to us. After that, however, we wouldn't expect a crash or even a modest decline in prices—save perhaps in the hottest markets—but a slowdown in gains. We're likely seeing a good deal of the gains for the future realized now. – Alex Marlow & John Carney Breitbart News Network     TOP STORY   Fed Divided: Minutes Reveal Rare Rift on Bond Purchases A rare rift among Federal Reserve officials came to light in the minutes of the central bank's June meeting that were released Wednesday. Fed officials agreed that it is important that the central bank "be well positioned to reduce the pace of asset purchases" if high inflation proves less transitory than forecast or the labor market recovers more quickly than expected. But they do not agree on how to go about reducing those asset purchases. The minutes show that several Fed officials think it would be a good idea for the Fed to scale down the purchases of mortgage-backed securities more quickly than the purchases of Treasuries in light of the extreme gains in housing prices seen over the past year. [Click here for more]   IN OTHER STORIES... Pain at the Pump: Gasoline Rises to 7 Year High, Up 40% Since January The national gas price average has increased 40 percent since the start of the year, according to the latest data from AAA. Gas prices are up from $2.25 to $3.13, the motorist service club reported. Ac cording to data from the Federal Reserve, this is the highest price for gas since... [Click here for more]   Mortgage demand in U.S. dips to lowest level since COVID-19 impact July 7 (UPI) — Mortgage demand in the United States has fallen to its lowest level since the start of 2020, before the COVID-19 pandemic began to take a toll on the economy, an industry report said Wednesday. Applications fell last week by almost 2% and are down 14% year-to-year, the lowest level since... [Click here for more]   China Bans Construction of Skyscrapers Citing 'Quality Problems' China's National Development and Reform Commission on Tuesday banned the construction of buildings taller than 500 meters (about 1640 feet) in the country amid concerns about the quality of some Chinese-built skyscrapers, Bloomberg reported on Wednesday. "The outright ban covers buildings that are taller than 500 [meters]," China's National Development and Reform Commission wrote in an official notice issued... [Click here for more] FOLLOW

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