The Federal Reserve Bank of Boston is forecasting a modest decline in housing construction and a flattening of house prices in New England, but "we could be wrong," the bank's president says.The residential housing sector is one of the "greatest areas of uncertainty" in forecasting economic activity, president Cathy Minehan told a Realtors conference. The Fed bank president warned that house prices could actually decline and rising interest rates could impede consumer spending more than expected. "Thus, changes in the residential real estate present a source of downside risk to growth," she said. "I should also note that in recent times residential real estate markets have often outperformed expectations." The Boston Fed can be found online at http://www.bos.frb.org.

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