Fed Officials: Housing Still in Sustainable Rebound

Despite warnings raised by some analysts in the wake of softening data releases, housing is still in the midst of “what appears to be a sustainable rebound,” say officials at the Federal Reserve Bank of Dallas.

In an annual report released Friday, Dallas Fed VP John Duca details the progress made over the past few years, pointing to improvements in inventory conditions, stable house price-to-rent ratios, and sustainable price growth as measured by the National Association of Home Builders’ Housing Opportunity Index as particularly good signs.

“Americans, who endured an unprecedented housing collapse, have reason for cautious optimism about the outlook over the next few years,” Duca remarked, adding, “That said, the pace of future national house price increases seems likely to be more moderate in coming years than in 2013, partly because house prices have already notably rebounded and partly because mortgage interest rates are somewhat higher than the lows posted in 2012 and 2013.”

Echoing Duca’s optimism was Dallas Fed president and CEO Richard Fisher, who, in a letter accompanying the report, summed up the Federal Reserve’s efforts in sparking a recovery in housing and the economy: the addition of $1.55 trillion of mortgage-backed securities and $1.75 trillion of U.S. Treasury notes to its portfolio.

“The most precious of any family’s assets, its home, is the foundation of economic security,” Fisher said. “With a durable housing recovery at hand and the broader U.S. economy poised to further improve, we are confident that 2014 will bring new opportunities for the country and the Eleventh District.”

That sentiment means a lot coming from Fisher, one of the more hawkish Fed governors who will have a vote in monetary policy issues this year. The Federal Open Market Committee has already voted twice in as many meetings to scale back monthly asset purchases; signs indicate another cutback is in the outing for the March meeting.

Notably, while Fisher and other Fed leaders are optimistic, industry professionals don’t seem to have the same sunny outlook: In February, theMReport.com hosted a poll concerning the recent housing slowdown, finding the majority of voters expect it’s “just the start of a [long-term] downturn.”