Pending Home Re-sale data shows residential real estate collapsing fast – how long can Fed stay put from lowering rates sharply?
Sam Adelton
Jul. 3, 2007

The summer will end in a couple of months. The Pending Home Re-sale data shows how poor the residential real estate market is. Those who own homes are trying to hold on to them. Those who do not own home are scared to get into it. The prices are way higher. No one yet is interested in lowering the prices sharply. Simply put, inventory is just not moving.

Fed expected the Pending Home Re-sale to get depleted by end of summer. There are no signs of that. Instead the mortgage default and corresponding possible foreclosures are increasing right and left. The Fed is now really worried. On one side the inflation from higher commodity especially energy prices and Asian wage inflation are creating havoc. On the other side the potential weakness in the housing economy.

How long can Fed stay put from lowering rates sharply? It depends on the political pressures. The Central Bank in principle wants to stay put for perhaps one more year. But in reality it will lower rates to pacify the politicians and the main streets. That will unfortunately increase the inflation sharply.

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Pending Home Re-sale data shows residential real estate collapsing fast – how long can Fed stay put from lowering rates sharply?
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The Central Bank in principle wants to stay put for perhaps one more year. But in reality, it will lower rates to pacify the politicians and the main streets. That will unfortunately increase the inflation sharply.
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