Fed still worried about role of real estate in economy

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Real estate woes are weighing on officials at the Federal Reserve. The minutes of the Fed’s last meeting, released today, said the central bank ‘saw no indication that the housing sector was beginning to stabilize.’

Lower house prices and mortgage rates have increased housing affordability, the Fed said, but concerns that house prices may fall further appeared to be holding back potential buyers.

Times financial columnist Tom Petruno has more details on the minutes of the Fed meeting on his Money & Co. blog.

The Fed also is worried about commercial real estate, noting that a large number of commercial property mortgages will come due in the months ahead when banks likely will still be facing balance-sheet constraints and vacancy rates in commercial properties could well be climbing.

-- Roger Vincent