The recent recession and slow recovery has wreaked havoc on businesses and households, alike. And according to Federal Reserve Chairman, Ben Bernanke, the government has felt "severe budgetary pressures" as well.

He notes that "for now, the budget deficit has stabilized and, so long as the economy and financial markets continue to recover, it should narrow relative to national income over the next few years."

There is progress being made across the nation. Pending sales increased for the second consecutive month, that according to the National Association of Realtors and their latest Pending Home Sales Index.

Pending sales rose 4.3 percent, and were up in all regions except the Northeast, which saw a 2.9 percent decline. Lawrence Yun, NAR chief economist, said the latest data is consistent with a gradual improvement in home sales in upcoming months. "Attractive affordability conditions from very low mortgage interest rates appear to be bringing buyers back to the market," he said. "However, the pace of a home sales recovery still depends more on job creation and an accompanying rise in consumer confidence."

Yun cautioned, however, that any sudden rise in interest rates could slow a recovery. It all has to do with inflation. If we start to see higher inflation, this could translate into higher interest rates. For now, however, affordability is near an all-time high.

In foreclosure news this week, we look to eRate's latest report showing that nearly one in every four homes sold in the second quarter of this year were in some state of foreclosure.

Additionally, these homes sold for 26 percent or more below the average sales price compared to properties not in foreclosure. The largest price deficit was seen in Ohio, which saw foreclosure sales prices, on average, at 43 percent of normal sale properties.

CoreLogic, the leader in innovative analytics, also predicted that the additional inventory of foreclosed homes on the market could likely double the time it takes a home to sell, from the current 11-month average.

"Given that the tax credit simply pulled demand forward, the distressed share is expected to rise … during the fall, when non-distressed seasonal sales begin to decline," analysts said.

The International Monetary Fund, or IMF, reports that "the most likely prospect for the U.S. economy is for a continued but slow recovery, with growth far weaker than in previous recoveries, considering the depth of the recession.

In the meantime, let's keep an eye on interest rates. Fed Chairman Bernanke gives the warning that "in the longer term, a rising level of government debt relative to national income is likely to put upward pressure on interest rates and thus inhibit capital formation, productivity, and economic growth."

Let's go now to the latest rates from Freddie Mac.

Published: October 11, 2010

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Carla Hill, M.A., works on the Realty Times staff as Managing Editor for our online publication. She also is Producer for the real estate news channel, seen daily on RealtyTimes.com and on video newsletters nationwide.