Housing Recovery May Tank Now That Fed Can No Longer Act Like a Drunken Sailor

Here’s a compelling headline: “Housing Recovery to End Soon.” Here’s another: “New Home Sales Rose 2.1% in May.” It might seem like conflicting information, but the point of the first headline is that despite plenty of month-by-month good news–including the fact that homebuilding is up and foreclosures are down–there’s still reason to be wary. Or, as the headline suggests, definitively depressed.

Debra Borchardt writes for The Street:

The wrench in the machine, though, is the potential for rates to go up now that Federal Reserve Chairman Ben Bernanke has signaled that he’d like to tap the brakes on bond buying. Even though the Fed has been buying bonds like a drunken sailor, banks have been careful about who gets a mortgage. You needed a near-perfect score to get a mortgage, which has kept the market in check. It is also the same thing that has some worried that if rates go up, this pool of buyers could shrink.

Other stats as quoted from The Street that point to some shifts:

– Year-over-year, new home sales are up 29%.
– Median and average home sales price for new homes sold in May was down slightly from April.
– Construction of larger, high-end homes is up.

• Housing Recovery to End Soon
• New Home Sales Rose 2.1% in May