Bernanke may be about to get help in an attempt to boost the economy

Federal Reserve chairman, Ben S. Bernanke, may be about to get help in an attempt to boost the economy, an industry bedrock: housing.

Employment growth, even with unemployment at 9.4 percent or higher since May 2009 and an increase in U.S. population housing means likely to improve in 2011 from its record low, said Charles Lieberman, chief investment officer of Advisors Capital Management LLC in Hasbrouck Heights, New Jersey. Mortgage rates are less than 5 percent, further supporting affordability.

An increase in housing construction would increase employment for construction workers and also for people in the supply industries stoves and sinks that go to new homes. In the house was reduced to less participation in the economy in history, 2.23 percent, employment growth slowed. The economy created 39,000 jobs in November, 5,000 construction jobs were lost.

"The housing market is going to shock people," said Lieberman, former head of monetary analysis in the Federal Reserve Bank of New York. "Once we got the ball rolling, it becomes easy to roll. The most important thing the Fed can do, it is not easy, is to promote job growth. If we see employment growth that is going to market very strong property. "

Employment increased by an average of 200,000 per month next year, bringing the unemployment rate, 9.8 percent in November, almost one percentage point, he said.

Interest Rates

At the Fed meeting to discuss monetary policy on December 14, Bernanke and other members of the Open Market Committee revised its 600 billion U.S. dollars of the bond program with purchase option. One hope is that by 2011 nearly zero Fed interest rates will finally be able to begin to reverse a half-decade decline in the housing.

residential investment share of the economy fell to 2.23 percent in the third quarter of 2010, the lowest since records began in 1946, up from 6.3 percent in the fourth quarter of 2005, the highest in 55 years. That decline has led to the loss of jobs in the construction industry: He fell to 5.6 million this year from 7.7 million in 2006.

Housing starts probably will reach a maximum of three years from 739,000 in 2011, creating enough jobs to shave half a percentage point the unemployment rate, said David Crowe, chief economist for the National Association of Home Builders in Washington.

Ugly Cycle

"This is an ugly business cycle," he said in a telephone interview. "We need job creation to people comfortable with buying a home. If they do, we will create jobs that will enhance the home buying and employment growth of extra fuel." Building more in 2011 add about 500,000 jobs, he said. The association of home builders' expected an unemployment rate of 9.1 percent in late 2011.

A background in the housing market could improve the prospects of companies in Midcap Index Standard & Poor's Homebuilding, which has fallen 68 percent since its peak in July 2005. Douglas Yearley, the head of the index members of Toll Brothers Inc., said in an interview.
"The recovery is here to stay," said Yearley, whose company, based in Horsham, Pennsylvania, is the largest U.S. builder luxury home. "I think that 2011 will be a year better, but I think 2012 will be a great year for us."

The number of contracts signed for the purchase of Toll Brothers homes rose 6.3 percent in the 12 months ended in October, compared with the previous year, the first increase since 2005, the company said in a report by December 2 .

Homebuilders ETF

The average price increased 6.1 percent to $ 565,079, the first increase since 2006. Shares of construction are 8 percent this month compared with a gain of 6.5 percent for the 500 Standard & Poor's.

The S & P Builders Exchange Traded Fund, which includes Los Angeles, KB Home, Fort Worth, based in the Dominican Republic Horton Inc., has risen 13.3 percent since Nov. 18, vs. 4.8 percent for the S & P 500 ETF.

Builders in the U.S. began work on 555,000 housing units in November to an annual rate, compared with 477,000 units in April 2009, which was the lowest in the census records dating from 1959.

Meanwhile, the U.S. population has continued to grow. The 2010 census data, published last week in Washington, show that the population amounted to 308.7 million 281.4 million in 2000, an average increase of $ 2.7 million a year.

More Homes

The number of U.S. households, an indicator of demand for real estate, is likely to increase by 0.7 percent to 118.7 million in 2011, the largest annual increase since the beginning of the crisis mortgages in 2007, according to Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts.

The lack of new housing construction has been "to recovery, but you could say that drag is fading now that the financial system is recovering," said James O'Sullivan, chief economist of MF Global Ltd. in New York. It is expected an increase of 12 percent of residential investment in 2011, with job growth of 200,000 in June, as much as 225,000 a month in the second half and an unemployment rate of 8.8 percent the fourth quarter.

Housing construction is likely to improve from the current minimum and still be well below its long-term trend, he said. A key to this forecast is supported by low interest rates, which enhanced the capacity of home ownership to record levels in October.

To provide housing

Housing affordability, measured by the ease with which a middle-income family can afford a median-priced house, hit a record high of 184.2 in October, the highest index reading in more than two decades of data, according to the National Association of Realtors in Washington.

Home prices continued to decline. The S & P / Case-Shiller index of property values fell 0.8 percent from October 2009, the largest drop year after year, since December 2009, the group said today in New York. Eighteen of the 20 cities showed price declines in October, led by a fall of 2.1 percent in Atlanta, and the decline of 1.8 percent in Chicago and Minneapolis.

However, mortgage rates have shaken the damping effect of the program's initial purchase of the Fed, known as the Queen Elizabeth 2 for the second round of quantitative easing. The U.S. average for a 30-year fixed mortgage rose to 4.81 percent during the week ended Dec. 23 from a low of 4.17 percent in mid-November, according to Freddie Mac, the mortgage buyer McLean, Virginia.

Pending sales of existing U.S. homes unexpectedly rose by a record 10 percent in October, the real estate group, said earlier this month, indicating the industry could be stabilizing. transactions in November rose 5.6 percent to 4.68 million at an annual rate, NAR said last week. Purchases of new homes rose 5.5 percent to an annual rate of 290,000 in November, the Commerce Department said on December 23.
"Gradual improvement '

Robert Niblock, chairman and CEO of Lowe's Cos., the second largest U.S. retailer home improvement, and Ian McCarthy, CEO of Beazer Homes USA Inc., expressed optimism qualified for the housing outlook. Niblock said in a teleconference on November 15 income "even in a difficult environment, we are seeing a gradual improvement in the fundamentals of the housing market."

Atlanta-based Beazer, a builder of entry, the national waiting-family housing starts to increase in 2011, "probably in the low double-digit percentage," McCarthy said in a November 5th earnings call.

Decreasing share of the economy for the construction of new houses, improving record lows not promote growth as well as in the past, said Paul Dales, economist at U.S. for Capital Economics Ltd. in Toronto. He agreed that residential investment is about to be a modest boost to gross domestic product.

No Drag

"Before if there was an increase of 10 percent GDP increased by 0.6 percentage points," said Valles. "Now, if it rises by 10 percent is an increase of 0.2 percent. The construction of homes are actually on the floor. There will be a drag on growth."

In October, 1.4 million construction workers were unemployed with only 46,000 jobs, a ratio of 31 workers for every job available, according to Labor Department data.

The Fed has completed 155.7 billion U.S. dollars of the allocated $ 600 billion in purchases. The central bank is also reinvesting profits from its holdings of maturing debt of the home.

His decision to start a second round of asset purchases sparked a political backlash in Washington, with Republican lawmakers criticized the measure as likely to be inflationary. Indiana Rep. Mike Pence and Sen. Bob Corker of Tennessee have proposed eliminating the Fed's dual mandate for full employment and price stability, and have the central bank's focus only on price stability.

Unable to get weaker

Bernanke, appeared on the CBS Television's "60 Minutes" on Dec. 5 to face the criticism, saying he was "one hundred percent" sure that the central bank could control inflation.

Asked about his outlook for the economy, Bernanke said that a return to recession was unlikely, adding that "it is because, among other things, some of the more cyclical parts of the economy such as housing, for example, are very weak. And you can not get much weaker. "

Fed officials are not optimistic about the housing outlook at its meeting on November 2-3, citing the source of elevated due to foreclosures. Some "saw the disputes over the documents of the mortgage and foreclosure likely to delay any recovery in housing markets," according to minutes of that meeting.

"Residential investment has failed to make a positive contribution to growth in this recovery," said the president of the Richmond Fed, Jeffrey Lacker said in a speech on Dec. 6 in Charlotte, North Carolina.

"Legacy of overbuilding"

"This contrasts with the two worst recessions of the past 60 years, in which housing investment increased an average of 40 percent in the first year of recovery," he said. "Given the important legacy of overbuilding, unique to this recession, I do not think that housing to contribute significantly to growth in the next two years."

A high foreclosure rate can not derail a housing recovery, said Lieberman of Advisors Capital. The company realized 55.7 million U.S. dollars of U.S. stocks 30 September, including real estate investment trust Sun Communities Inc. and Colonial Properties Trust, according to Securities and Exchange Commission.

Foreclosures are "half the story," Lieberman said, because people who lose their homes must find homes elsewhere. "They do not disappear or move to Mars. They take another holiday away from the market."