It’s rare when housing market indicators aren’t twisted and stretched like taffy during the course of a 24-hour news cycle. March 15 was no exception.
First came this month’s edition of the National Association of Home Builders/Wells Fargo Housing Market Index, a measure of homebuilder confidence. Stuck at 16 for the previous four months, the HMI nudged up to 17, its highest reading, NAHB noted, since May of last year. The factors behind the uptick include improved readings in three of the HMI’s component indexes (sales expectations, and point gains in the South and West) as well as expectations that the spring home-buying season will parallel modest improvements seen in the overall economy.
The Fed says hi
The overall economy in fact got a cautiously approving nod on Tuesday from the Federal Reserve, which declared that, while it continues to watch for signs of inflation, it sees the current rise in commodity prices unlikely to send the entire economy into an inflationary ascent, and so short-term interest rates will remain in their current lending ranges (0 to 0.25%). (Curiously, the Fed didn’t mention the catastrophe in Japan.)
But then economist and S&P/Case-Shiller home-price index co-creator Robert Shiller, told Bloomberg Television’s “Countdown” host, Mark Crumpton, that the “news doesn’t look so encouraging right now with us talking about phasing out Fannie and Freddie, which are the main supports of the housing market.” Shiller was referring, of course, to proposals by the White House and members of Congress to phase out mortgage financiers Fannie Mae and Freddie Mack, and perhaps eventually replace them with a system of privately run mortgage guarantors.
A Bloomberg story pegged to Shiller’s comment didn’t elaborate on the comment, beyond offering background on overall housing market conditions and on proposals for winding down Fannie and Freddie. Hanging in midair like that, the remark seems a bit puzzling because any program designed to phase out the two government sponsored enterprises would take considerable time to set up and at least a few years to run its course. It’s also not clear that such a program would rattle the cage much over, say, the next couple years. But it seems likely Shiller will chime in on this again later.
In any case, we can thank him for the strange twist in today’s housing-market news feed.
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