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According to the highly regarded S&P / Case Shiller HPI, prices rose by 2.2% in May from April. The seasonally adjusted figure rose by 0.9%. The year over year figure dropped by 0.7%, far better than a drop of 1.5% that was expected.

A positive surprise was also recorded in the previous month. It’s important to note that not all US housing figures are positive. The common analysis is that the US housing sector has found a bottom, but is rising from this bottom very slowly.

New and existing home sales disappointed last week, while building permits were better than expected. The Federal Reserve sees housing and employment as the weak spots. An option to make a third quantitative easing program (QE3) directed specifically towards the housing sector was discussed. Another option was to “twist” towards such mortgage based assets: buying MBAs while selling other treasuries.

These options seem to be off the table for now: these figures show that housing is not doing that bad at the moment. In addition, the mortgage lending rate for 30 years is at historic lows.

There’s little the Fed needs to do or can in this sector.

Further reading:  QE3: More Expectations and More Disappointments?