I just read a great, but technical, article on Bloomberg.com regarding the current state of affairs in the world of Sub Prime lending. If you are following along the crazy ups and downs of the real estate world as of late you will find this article interesting. The bond markets have been volatile lately moving higher on fears that the Fed will get involved in monetary policy to combat inflation. We have also heard that existing home sales are much stronger than expected. But, keen investors will take note that aggressive incentives by home builders may be behind much of the sales increase as existing home sales fell by the largest margin since 1970 according to the Bloomberg article.

[tags]Sub Prime, Lending, Loans, Real Estate, Bonds[/tags]

Bloomberg.com is reporting today that US home sales dropped in July, over 11 percent from a year earlier according to the National Association of REALTORS (NAR). This report comes on the heels of a statement made by Chicago Fed President Michael Moskow said a sharp decline in housing, which by some estimates accounted for more than half of growth over the last three years. According to Moskow a sharp decline in the national housing market would be a risk to the economy.

Of course this should come as no surprise to anyone with half of a functioning brain. The FOMC is walking a very fine line right now trying to balance a measured slow down in the national housing market and still keep inflationary pressures in check.

[tags]Fed, FOMC, Interest Rates, Housing, NAR, Real Estate, Inflation[/tags]