The prices of new houses in the U.S have dropped by 13% annualy-based, last month. The price of a new house is $218000, $44000 less than in Mars.
Dimitry Fleming, economist at ING, says that these figures prove that the housing crisis is still on a role. He also points out that sales of houses can be very volatile on a monthly basis, therefor he works with a
3-monthly average.
Wednesday evening, The Fed announced in the latest version of the "Beige Book" that the demand for residential property is keeping to decrease with only few points of stabilization. Secondly the Fed will have to lower its interest rate (-0.25%) to sustain the "labour market". This is somehow strange, despite a growth of 4.9% of the American economy, the Fed still wants to lower its interest rate.
ING economist Rob Carnell explains why we should look with caution at this 4.9%. First the housing crisis hadn't yet fully kicked in. Secondly the figures were "improved" by a rase of stocks. This even could mean that companies aren't able to sell all their goods , so it's actually bad news.
The expectation of lowering the interest rate is giving the stock markets a boost, despite the bad economical news.
Dimitry Fleming, economist at ING, says that these figures prove that the housing crisis is still on a role. He also points out that sales of houses can be very volatile on a monthly basis, therefor he works with a
3-monthly average.
Wednesday evening, The Fed announced in the latest version of the "Beige Book" that the demand for residential property is keeping to decrease with only few points of stabilization. Secondly the Fed will have to lower its interest rate (-0.25%) to sustain the "labour market". This is somehow strange, despite a growth of 4.9% of the American economy, the Fed still wants to lower its interest rate.
ING economist Rob Carnell explains why we should look with caution at this 4.9%. First the housing crisis hadn't yet fully kicked in. Secondly the figures were "improved" by a rase of stocks. This even could mean that companies aren't able to sell all their goods , so it's actually bad news.
The expectation of lowering the interest rate is giving the stock markets a boost, despite the bad economical news.
I fully agree with the fact that the housing crisis is still on a role. I even think that the full effects will only kick in within 2 months. The Fed said that de demand is still decreasing, so we'll first have to see an end to this decrease before we can talk about full effects.
The Fed will probably lower its interest rate to sustain the labour market. I agree that they have to be more concerned about employment, at this point, than about inflation and the dollar rate.
With the housing market causing social dramas, they can't aford less employment.
The latest figures were smukked up... Well, that's almost the case every month. We'll just have to be carefull with our interpretation.
Thomas
source: de tijd, editie vrijdag 30 november 2007, pg 17, huizenprijzen VS kennen grootste daling sind 1970
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