Federal Reserve officials have increased calls for more government action to revive the stagnant housing market, according to multiple news outlets.
Federal Reserve officials on Friday delivered a series of speeches calling for:
- The purchase of more mortgage-backed securities with the hope of lowering long-term interest rates
- Another round of bond buying to spur growth
- Fannie May and Freddie Mac to reduce loan balances for underwater homeowners who owe more on their mortgage than their home is worth.
The Fed also faces political pressure from Republican presidential candidates who routinely draw large applause for pledging to rein in the central bank, according to Reuters.
"The Fed is trying to communicate that, 'We've done an awful lot, we're not happy with the results of our efforts and it's time to kick it up a notch because only extraordinary programs are going to bring about a faster result,'" Jim Vogel, an analyst at FTN Financial, told The Wall Street Journal.
On Thursday, the Fed released a 26-page report detailing how housing continues to hamper a comprehensive economic recovery. The report's opening line reads, "The ongoing problems in the U.S. housing market continue to impede the economic recovery. House prices have fallen an average of about 33 percent from their 2006 peak, resulting in about $7 trillion in household wealth losses and an associated ratcheting down of aggregate consumption."
Also on Thursday, the National Association of Home Builders (NAHB) applauded the Fed's report. "The Federal Reserve's report to Congress confirms what we have been saying for some time: That extraordinarily tight credit conditions are preventing creditworthy borrowers from obtaining home loans and this is harming the housing market and the broader economy," said NAHB Chairman Bob Nielsen.
