Monday, July 25, 2005

Is Greenspan Screaming "Slow down?"

Martin Wolk, chief economics correspondent for MSNBC, has an interesting analysis of Federal Reserve Board Chairman Alan Greenspan's semiannual monetary policy report last week to the Congressional Committee on Financial Services. Quoting the chief economist for the National Association of Home Builders, Wolk's analysis raises the question of whether Greenspan is trying to use his influence to ease the housing market into a slowdown in an effort to prevent a disastrous pop:
David Seiders, chief economist for the National Association of Home Builders, said Greenspan appears to be hoping that his sustained focus on home prices will help cool the market, perhaps by discouraging some would-be speculators from entering the market.

“I frankly hope it evolves that way,” he said. “We could use less speculation in housing."

There are plenty of analysts that agree with Seiders. Reuters reports today that more analysts are concerned about a bubble burst in the U.S. housing market:
Economists say they are most worried about the priciest markets, such as parts of California and Florida, as well as Las Vegas and cities in the U.S. Northeast.

Meanwhile, even the national numbers continue to soar. From Reuters:
The national median home price rose to $219,000, up from $191,000 a year ago and the strongest increase since November 1980, when annual appreciation was 15.6 percent, the (National Association of Realtors) group said.