News Article From: 05-19-2006
The first article, Bernanke: Housing headed for a safe landing, from MSNBC, reports that Fed Chairman Ben Bernanke stated that the nations housing market appears to be headed for a safe landing in a speech he delivered on banking in Chicago yesterday. "Our assessment at this point... is that this looks to be a very orderly and moderate kind of cooling," Bernanke stated. One of the things that Bernanke and his Fed colleagues are keeping close tabs on is the extent to which the cooling housing market will slow overall economic activity, which is expected to slow down in the months ahead. Bernanke did not discuss the future course of interest rates in his speech, but the Fed is leaving its options wide open in terms of future rate decisions. It suggested that another rate increase could be possible if inflation worsens.
The second article, Housing decline triggers layoffs, from the Arizona Republic, reports that home builders are laying off construction superintendents, subdivision sales agents, finance specialists and other employees, a telling sign that metropolitan Phoenix's new-home market has taken a radical turn from last year's selling frenzy. Home building is down more than 16 percent in the first quarter of 2006. "If you aren't going to build as many subdivisions as last year, you don't need as many employees," said Jay Butler, director of the Real Estate Center at ASU. "This is the beginning of a contraction in the home-building industry," Butler added. Housing is the Valley's biggest industry, with one of every three dollars in the area's economy generated by housing. Butler said that this contraction won't be anything like the downturn in the early 1990's when huge homebuilders closed their doors. Local housing analyst RL Brown said builders are pouring fewer slabs and that the problem in his view is the cancellations of contracts, not a lack of buyers.