Everything is going better. Sales of new houses, the housing Price Case Shiller Index ticks up., and so on.
The less bad news was helped along by the steep drop in interest rates to 50-year lows. And the corresponding drop in mortgage rates, due to the Federal Reserve’s massive buying of $1.25 trillion worth of mortgage-backed securities and $200 billion in agency debt. Then there are Treasury subsidies and guarantees for Fannie and Freddie to the tune of $280 billion.
An $8,000 tax credit for new home buyers may seem small against the $150,000 average house price, but it is a noticeable part of 20% down on a $100,000 home. Has the economy really turned the corner? And what will happen once the US government is closing the money spigots…
Before getting too exited: loans at least 90 days past rose for the 13th quarter (that’s more than 3 years) in a row. We’re now at 4.35%, the highest level recorded in the last 26 year.
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