The FOMC and Positive Housing Headlines by Tim McLaughlin
The FOMC statement release Wednesday was welcome news as compared to last month’s statement in as much as it didn’t say anything unexpected or shocking.
If you remember the March 13th announcement, there were numerous changes and a headline comment stating that unemployment declined “notably” and the inference at that time was that QE3 was all but off the table.
In Wednesday announcement, benign/Fixed Income positive comments such as “strains in the global financial markets still exist” clarified that things were not as rosy in April as they appeared in March, giving fuel and stability to the Fixed Income sector.
Based on the announcement, it is clear that concerns in Europe have not subsided as much as initially thought and the Fed continues to stand ready ”˜if more stimulus is needed’ (Bernanke). Additionally, they stated that the central bank will maintain its reinvestments of principal payments from agency mortgage backed securities and debt holdings into new agency MBS.
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Two positive housing valuation metrics in the news:
1) US home values rose 0.5% from February to March, according to new data from Zillow. This marks the largest monthly increase in the Value Index since May 2006, when home values also rose 0.5%.
2) U.S. house prices rose 0.3% on a seasonally adjusted basis from January to February, according to the Federal Housing Finance Agency’s (FHFA) monthly house price index (HPI).
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Terrific article in today’s Wall Street Journal entitled “Stunned Home Buyers Find the Bidding Wars Are Back”. The main takeaways are that inventory is declining, housing appears to have hit bottom, and more people are interested in procuring the “right house” in this spring market and are less tempted to wait and test fate when they find what they want then the last few years.
