The Fed is planning an exit strategy in an effort to continue to push the
economy on to recovery. Here is some important information about recent
economic developments and what you can expect in the coming months:
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The Fed is scheduled to end its purchases of mortgage-backed securities at the
end of March. However, depending upon economic activity and conditions in
financial markets, the committee will continue to review its purchases of
securities and the impact the change will have on the housing market.
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National home prices are expected to still fall until they stabilize later this
year or in 2011. The homebuyer tax credit is set to expire at the end of April
and this program, along with the high rate of foreclosures, could disrupt price
stabilization and an increase in home sales. However, economists still predict
that housing demand is expected to increase after the recession.
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Home starts rose 2.8 percent and construction of single-family homes increased
1.5 percent in January from the prior month. U.S. housing starts hit a 6-month
high. The demand for foreclosed homes has remained strong.
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Jobs are still a big factor in the economy’s recovery. The unemployment rate is
hovering around 10 percent and this will continue to affect the housing market.
When more signs demonstrate the job market is improving, the housing market
will be better positioned for stabilization.
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Mortgage rates are expected to rise, which could affect refinancing efforts and
the housing market. Economists predict that rates for a 30-year mortgage will
pass 6 percent this year as the government reduces housing market support.
However, rates in the 5 percent range are exceptionally low by historical
standards, providing opportunities for homeowners.
While challenges will continue to be present, with the Fed’s recent
involvement, the economy is demonstrating signs of improvement.
