"A little froth" to be sure. The ever-hot housing market showed no signs of cooling Tuesday after April sales and prices smashed records and forecasts. Fed chief Alan Greenspan on May 20 voiced concerns over "froth" in many local markets but downplayed risks of a national bubble. Similar sentiment was echoed in minutes from the Fed's May 3 meeting. They showed central bankers slightly more cautious of a slower economy but still firmly focused on inflation.
Existing single-family home sales soared last month by 4.5% to a seasonally adjusted annual rate of 7.81 million, the National Association of Realtors said. Economists expected sales nearly flat with March's 6.87 million.
Demand (and prices) continue ever upward thanks to still-low mortgage rates despite rising short-term interest rates. "In some areas it's looking pretty bubbly, but I think it'll continue to bubble for a while," said David Wyss, Standard and Poor's chief economist. "Overpriced or not, people want to buy houses and see them as good deals because you can lock in such low interest rates." (This guy obviously has no cojones- how about a caution A*hole???)
The median sales price for a U.S. home rose 15% to $206,000 vs. a year ago. That's the sharpest yearly gain in a quarter century, thanks in part to 30-year mortgage rates that keep falling. In the latest week they hit 5.71%, down from April's 5.83% and March's 5.93%. "A new record is a bit unexpected, but so is the performance of mortgage interest rates, which have been lower than forecast," said David Lereah, NAR's chief economist. "Certainly there are some select areas where there could be some 'froth'." (Calling this idiot an "economist" is funny....)
Economists still view April's home sales data as a rush to lock in low interest rates. Most see mortgage rates rising and demand slowing after a record 2004. The Fed pondered housing as well on May 3, when it hiked the federal funds rate by another quarter point, its 8th straight such move over the past year, to 3%.
Minutes out Tuesday showed most policymakers downplayed soft patch fears. Weak March and early April economic reports were seen as mostly "transitory." Instead, the Fed favors continuing the inflation fight and its strategy of "measured" rate hikes.
Debate continued on use of the "measured" language. Some officials argued it could limit the Fed's ability to pause or speed future hikes. But most agreed that caveats already in its statements would allow for such changes. As for housing, members cited the possibility of some "speculative excesses" in "hot" local markets. Worries continue over speculation in the housing and mortgage markets, as well as easy access to adjustable and interest-only loans.
Since that meeting, jobs and retail sales have improved markedly and the latest inflation readings show only moderate core prices. "Back then, it looked like things really were slowing down. After seeing numbers since then, it looks pretty clear they weren't," Wyss said. Bonds are sending a different signals. The 10-year Treasury yield hit a three-month low of 4.03% Tuesday -- suggesting the market is more worried about slower growth than higher inflation.
Basser, I love to make your day by giving you the oppurtunity to give me s..., LOL. In regard to the roadtrip, if I had the proper personnel I would probably be on the road right now. Remember, 50k x $5 is real money....I wouldn't want to be another-------speaking of which...is there any news on SUR? Heading out the door in pursuit of the giant clam, KEEP CLAM!
Oh Basser, I have saved this site for future study...as of now I am not prepared to pass the test since I have not found the precise answers to my questions. As time allows, I will continue Clouseauin', thank you.
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