'Seen the worst,' Freddie Mac says of housing

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Millionaire Now! by Larry Nusbaum

This blog is based on the organizational principles found in my new book, "Millionaire Now! - A Financial Toolbox with Seven Steps to Wealth".

'Seen the worst,' Freddie Mac says of housing

Posted on 11/17/2006 11:11 AM | Link | Post Comment

Freddie Mac's chief economist Frank Nothaft says today: "We've probably seen the worst of the housing slump, although it may not have entirely bottomed out yet. On the other hand, lower mortgage rates should help stimulate activity in the housing market."

Freddie Mac's weekly rate report says: "The 30-year fixed-rate mortgage (FRM) averaged 6.24 percent with an average 0.5 point for the week ending November 16, 2006, down from last week when it averaged 6.33 percent. Last year at this time, the 30-year FRM averaged 6.37 percent. ... Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.04 percent this week, with an average 0.5 point, down from last week when it averaged 6.08 percent. A year ago, the five-year ARM averaged 5.86 percent."

To read more CLICK HERE .

Fed thinks chance of housing crash 'ebbed'

"Participants noted that housing activity was likely to remain a substantial drag on economic growth over the next few quarters. Many participants drew some comfort from the most recent data, which suggested that the correction in the housing market was likely to be no more severe than they had previously expected and that the risk of an even larger contraction in this sector had ebbed. But further adjustment in the housing market appeared likely. Single-family housing permits continued to fall and inventories of unsold homes remained at historically high levels. Contacts in the building sector suggested that construction firms were attempting to reduce their backlogs of unsold homes, both by cutting back sharply on new construction and by offering substantial price incentives. Several meeting participants noted the considerable strain on some small- and medium-sized residential construction firms.

"To date, weakness in the housing market and the associated downshift in house price appreciation did not seem to be spilling over into consumer spending, which appeared to have grown at a steady pace in recent months. Retail activity in most Districts had been relatively robust and contacts in the retail sector were generally upbeat about the outlook. Several participants noted, however, that contacts within the transportation sector had reported that activity in anticipation of the holiday shopping season appeared to be softer than in previous years. Meeting participants judged that consumer expenditures going forward were likely to expand at a steady pace a little below the growth in disposable income, supported by favorable financial conditions, continued increases in employment and income, and the recent decline in energy prices. Nonetheless, many participants expressed concern that ongoing developments in the housing market could have a more pronounced impact on consumer and other spending, especially if house prices declined significantly."

To read the entire meeting minutes, CLICK HERE

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