Most Federal Reserve officials foresee a continued slow recovery in the housing market and some are optimistic the improvement may pleasantly surprise their fellow members on the Federal Open Market Committee.
A few FOMC members are “more optimistic about the potential for rapid housing recovery,” according to the newly released minutes of the April 25-26 FOMC meeting.
The optimists cite reports of stronger demand in some regions and the improved sentiment among homebuilders. In addition, recent changes to the Home Affordable Refinancing Program are “contributing to the refinancing of performing high LTV loans.” The Fed released the FOMC minutes Wednesday afternoon.
The monetary policy committee is in general agreement that home prices are stabilizing with improvements in sales and starts recorded this year.
However, sales and starts are still at low levels and some FOMC members attribute the improvement to the unusually warm winter weather in many parts of the nation.
Despite the hope of better days ahead, Federal Reserve chairman Ben Bernanke is not in the optimists’ camp. He is concerned that tight lending standards and the contraction of mortgage credit since the financial crisis will keep a lid on the housing recovery.
“Many factors suggest that this situation will be difficult to turn around quickly, including the slow recovery of the economy and housing market, continued uncertainty surrounding the future of the government-sponsored enterprises, the lack of a healthy private-label securitization market and cautious attitudes by lenders,” Bernanke said in a May 10 speech.
