US House Prices Continue Rising – No Need for Fed Action

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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?

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Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.