Fed Mulls Fate of QE3; Vegas Residential Market Normalizing; Mortgage Delinquencies Down

Some members of the Federal Reserve’s Open Market Committee brought up during its March meeting phasing out QE3 sooner rather than at an unspecified date. The Greater Las Vegas Association of Realtors reported that for the first time in years, non-distressed sales have accounted for more than half of all local home sales so far in 2013. And mortgage delinquencies are still on a downward trend.

The Federal Reserve released the minutes of the Federal Open Market Committee meeting of March 19-20 on Wednesday, and while it didn’t reveal any dramatic fractiousness within the Central Bank, it seems that some members of the committee brought up phasing out QE3 sooner rather than at no specific point in time. Or at least they’re thinking about that possibility. But for now, QE3 abides. 

“The staff provided presentations covering the efficacy of the Federal Reserve’s asset purchases, the effects of the purchases on security market functioning, the ways in which asset purchases might amplify or reduce risks to financial stability, and the fiscal implications of purchases,” the minutes said. “Meeting participants generally judged the macroeconomic benefits of the current purchase program to outweigh the likely costs and risks, but they agreed that an ongoing assessment of the benefits and costs was necessary.” 

Also in the minutes: “Many participants emphasized that any decision to reduce the pace of purchases should reflect both an improvement in their overall outlook for labor market conditions … and their confidence in the sustainability of that improvement. A couple of these participants noted that if progress toward the Committee’s economic goals were not maintained, the pace of purchases might appropriately be increased.” 

A Semblance of Normalcy in the Vegas Residential Market 

The Greater Las Vegas Association of Realtors reported this week that for the first time in years, non-distressed sales accounted for more than half of all local home sales so far in 2013. Vegas is an important housing market to track, since it was the poster-child for how low the housing crash could go. Now homes prices are up in the market, and inventories are down. 

In March, 33.3 percent of all existing local home sales in the market were short sales, down from 37.9 percent in February. Another 11.2 percent of all sales during the month were REO, up from 10.2 percent in February. The remaining 55.5 percent of all sales are the traditional type, according to GLVAR. In March 2012, 67.3 percent of total sales were distressed.

Inventory has also dropped precipitously, especially since last year. At the end of March, GLVAR reported 2,839 single-family homes listed without any sort of offer. That’s down 6.8 percent from February and a whopping 42.1 percent from one year ago.

Mortgage Delinquencies Still Dropping 

Lender Processing Services released its Mortgage Monitor for February on Wednesday, and delinquencies are still on a downward trend. According to LPS, 6.8 percent of U.S. mortgages were delinquent in February, a drop from 7.03 percent in January (more than 30 days late, but not in foreclosure yet). In February 2012, delinquency was 7.28 percent. Some 3.38 percent of mortgages were in the foreclosure process, down from 3.41 percent in January, and compared with 4.2 percent in February 2012. 

Wall Street went on its merry way on Wednesday, perhaps happy that QE3 will continue for a time, but in any case hitting new highs. The Dow Jones Industrial Average gained 128.78 points, or 0.88 percent, while the S&P 500 and the Nasdaq were up 1.22 percent and 1.83 percent, respectively.