Thursday, 27 January 2011

Fed maintains policy stance as new home sales jump

There was no change in the Federal Reserve's monetary policy stance on Wednesday. Reuters reports:

The Federal Reserve showed on Wednesday it was in no rush to cut short its rescue of the U.S. economy, saying high unemployment still justified its $600 billion bond-buying plan even though the economy has shown some signs of improvement.

In a statement that was a bit more upbeat than after its meeting in December, the Fed acknowledged for the first time a rise in commodity prices that has fueled global inflation, but signaled it would not throw the U.S. central bank off course.

While the Fed remains cautious on the economy, data continue to show that it is improving. Reuters reports that new home sales hit an 8-month high in December.

Sales of U.S. new homes raced to their highest level in eight months in December, but gains were driven by a surge in the West that economists were reluctant to call a sign of the market's recovery.

Single-family home sales jumped 17.5 percent to a seasonally adjusted 329,000-unit annual rate, the Commerce Department said on Wednesday. Economists had expected an increase to only a 300,000-unit pace...

With the spike in sales nationally, the supply of new homes on the market fell to 6.9 months' worth, the lowest since April, from 8.4 months' worth in November.

The latest housing data from the UK, though, were not as positive. Figures from the British Bankers' Association on Wednesday showed that mortgage approvals fell to their lowest level in nearly two years in December while property data firm Hometrack reported on Thursday that house prices in England and Wales fell for a seventh month in a row in January.

While the US and UK are hoping for a recovery in their housing markets, China is trying to slow its own down. AFP/CNA reports the latest action by Chinese authorities.

China on Wednesday raised the minimum down payment for second homes and ordered authorities to rein in property prices in its latest move aimed at quelling public angst about high real estate costs.

A meeting of the State Council, China's cabinet, presided over by Premier Wen Jiabao ordered that the minimum second-home down payment be hiked to 60 percent of the property's value.

1 comment:

Brookfield San Diego said...

Home sales will probably plunge in the future due to the new mortgage requirements. Not many people will be able to afford the down payments or meet the 28% mortgage payment to income ratio.

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