The Federal Reserve Beige Book

To figure out where real estate is going in the next few months, start looking towards the Federal Reserve. Maybe you should focus on the latest pending home sales numbers? Look at both, but the key is this: The Federal Reserve's latest Beige Book Report. This report has economic data from each 12 regional banks, and nine of those 12 had positive data.

Despite the bad weather at the beginning of the year, the Federal Reserve found consumer spending and manufacturing output increasing. Both of these factors are good indicators of economic growth, especially consumer spending which accounts for 70% of U.S. economic activity.

A seperate report by the Commerce Department stated that consumer spending increased by half of a percent in January, which outpaced the growth for the past four months.

What does all this mean? It means consumers are getting their confidence back and spending more money to fuel the economy.

For the housing market, the National Association of Realtors claimed that the severe weather that tore parts of the country apart has damaged home shopping, knocking down pending home sales by 7.6 percent.

Pending home sales, which are signed contracts that havent yet been closed, are still 12 percent higher than they were this time last year. It's believed that there will be a bounce back in the next few months because buyers will be rushing to sign contracts to qualify for the expiring home purchase tax credits.

Home prices across the country are showing hints of improvements. According to the latest Clear Capital Price Index, prices have risen 5% on average for the most recent quarter on a year-over-year basis.

What is helping this is continuing favorable financing conditions in the mortgage markets. Mortgage applications have been up 12 percent in the past few months.



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