'Fundamentals' Will Sustain U.S. Housing Demand

A slowing housing market doesn't appear to be hampering the U.S. economy substantially, the Federal Reserve reported yesterday.
By: Martin Crutsinger: REALTOR® Magazine Online
The Fed said that the majority of its 12 regions reported lower asking prices for homes, softening in sales activity, and rising inventories of unsold homes. But Michael Moskow, president of the Chicago Federal Reserve Bank, downplays fears that the housing slump would pull the entire economy into a prolonged downturn.

"We do not see the slowing in housing markets spilling over into a more prolonged period of weakness in the overall economy," Moskow said Thursday. There are some very important fundamentals that should continue to support housing demand, especially the low level of mortgage rates, he said.

The Fed's regional economic reports will be used when central bankers meet on Oct. 24-25 to consider whether or not to raise interest rates.

While it’s expected that the Fed will leave interest rates alone for the third straight meeting, it is clear that officials remain concerned about inflation. "The risk of inflation remaining too high is greater than the risk of growth being too low," Moskow said.