November’s pending home sales continued to rise for the third month in a row reaching their highest level in two-and-a-half years. (NAR)
In November, pending home sales rose 1.7 percent to 106.4 after October saw a 5.2 percent increase.
“…Home sales are recovering now based solely on fundamental demand and favorable affordability conditions.” Lawrence Yun , NAR (National Association of Realtors) chief economist said on Friday.
Home Sale purchases shot up 4.4 percent up to 377,000 in Thursday’s announcement. This annual pace is the highest since April 2010.
In the past two weeks we’ve also seen building permits hit a 4-year high.
United States Housing Market
Quantitative Easing (QE3), introduced September 13th set a stage for “additional agency mortgage-backed securities at a pace of $40 billion per month”. When the Federal Reserve buys these bonds, they do it by crediting the accounts of the banks that they are buying the bonds from. Therefore, money starts flowing into bank’s Fed accounts. By doing this, the banks are encouraged to lend more money to the public through loans and rates can also drop (they have already dropped extremely low).
In theory, this ought to encourage people to take out more loans, and therefore stimulate the economy.
A primary danger of this third round of quantitative easing is that it is unlimited, there is no specific goal in place. The goal is to see the economy “improve substantially” (Federal Reserve). That means, if there is no improvement, they will continue easing until there is improvement. And if there is still no improvement, we will continue? A vision without a plan is a fantasy, a plan without a vision is insanity. This is a plan (QE3) but there is no definable destination for this plan to reach.
Forex Trading and the Housing Market
We’ve seen very good housing market news for the U.S. economy recently. This doesn’t necessarily mean it is good news for the U.S. Dollar especially in light of the fiscal cliff.
At 3pm Friday White House executives met for last minute Fiscal Cliff discussions. Those present in the meeting were to include: Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell, House Speaker John Boehner and Minority Leader Nancy Pelosi with the president, Vice President Biden, and possibly others. (ABC)
What are your thoughts about the Fiscal Cliff?
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