No June Rate Increase

The Federal Reserve's decision at the end of June not to immediately raise rates is expected to have a calming effect on the housing economy, which has seen boom years in 1997 and 1998 because of mortgages rates in the 6 and 7 percent range, and then a drop off in 1999 and this year as rates moved above 8 percent.

At its June meeting, the central bank said it was satisfied - for the moment - that the overall economy had cooled enough to offset the likelihood of rapid inflation. The bank warned, however, that additional rate hikes may be in store later this year if the economy once more begins to overheat. Some economists say they expect another nudge as early as the Fed's Aug. 22 meeting.

The prime lending rate currently stands at 9.5 percent, its highest level since January 1991. Mortgage rates are hovering around 8.5 percent.

Homes sales up again

The National Association of Realtors reports that home sales are on the rise again, primarily because more homes are being put on the market.

According to NAR economists, sales of existing homes rose by 4.3 percent nationwide in May. If that pace continues, almost 5.1 million homes will change hands this year.

NAR officials say that one of the key reasons home sales had been slipping in the past several months was that consumers just weren't interested in moving. Demand was high, say the officials, but inventory was low. More homes came onto the market in May, however, helping satisfy the demand.

The national median existing-home price was $137,200 in May, up 3.3 percent from the same month a year ago when the median price was $132,800.

Beach front warning

The Federal Emergency Management Agency, whose job it is to prepare Americans for disasters and then help clean up after them, is worried that natural beach erosion along the coastlines could damage or destroy as many as 87,000 beach front homes and businesses in the next 10 years.

FEMA says about 1,500 homes are lost per year due to coastal erosion, with an annual loss that exceeds more than $500 million.

FEMA managers note that a major ocean storm can wipe away as much as 100 feet of beach front in one day. While some of that can be recovered through restoration work, not all of it can be replaced.

Fannie helping bring homeownership to poor

As a result of a national television campaign that has been running for seven years, the Fannie Mae Foundation says it has distributed more than 10 million home buying guides to consumers that help show them that homeownership is possible.

The campaign, called Opening Doors, was launched with the goal of reaching 5 million people by the end of 2000. That goal was reached in June of 1998 and to date, the results are double the initial goal with six months remaining.

Stacey Davis, president and CEO of the Fannie Mae Foundation, says the corporation has found that lack of information is a critical barrier to homeownership. "We created the Opening Doors campaign to break down those barriers and provide home-buying information in an easy-to-read, non- intimidating manner."

Free copies of the guide are available in English, Spanish, Chinese, Korean, Vietnamese, Russian, Haitian Creole, Polish and Portuguese. Consumers may call 1-800-688-4663 for a copy of the guide. Guides in Spanish are available by calling 1-800-782-2729.

Lumber prices falling

Lumber prices are beginning to fall across the United States, taking a little pressure off the cost of building a home.

Lumber for July delivery was about $276.30 per 1,000 board feet, the lowest level since December 1998. Insiders say the price is falling because new home building has slowed down in many portions of the country.

Published: June 30, 2000

Use of this article without permission is a violation of federal copyright laws.