A_New_Home

The Fannie Mae agency,(Federal National Mortgage Association) has an effect on the housing market. The Federal Reserve System, Housing and Urban Development, and the Department of Commerce also have effects on the housing market. The Department of Commerce regulates real estate brokers and sales associates to make sure they conduct business in a legal and ethical manner. According to Mankiw tax distortions due to inflation will cause Americans to save less. The person who is trying to buy a home will have to pay taxes on the interest from their savings accounts. This will affect inflation. Mankiw states that the Federal Reserve System is the central bank of the U.S. This system controls how much money is available and sets the money supply by policymakers in the central bank. Mortgage rates are affected by policies that tend to set the interest rates. These rates are based on the Federal Reserve System. According to the National Association of Home Builders families were purchasing homes more in October 2009 for the first time home buyer’s tax credit. The purchase of homes dropped in November and December. The American Recovery and Reinvestment Act of 2009, legislation to extend unemployment and the weather will assist the economy in its recovery path. This recovery will help jobs to grow which will help restore home buyer’s confidence and give them a start in purchasing homes again as stated by the NAHB. According to the National Association of Realtors the median price for homes is $178,30They also state that new home sales in December were 342,000 and housing starts were 557,000. The Federal Reserve and the Treasury took steps to help the credit market by making credit available to banks, money market mutual funds and in the ability of firms to issue commercial paper. A decrease in the tax rate and an increase in government spending; increase disposable income which creates a demand for houses. This will cause the price of the housing market to increase. Mortgage rates and a decrease in housing prices prevents a rise in housing starts. According to Amadeo (2010) the Federal Open Market Committee guides mortgage interest rates and bank loan rates. This committee also controls the selling price of homes. In the economy today I would not purchase a home because the unemployment rates are high which is affecting home buying. Currently a person would not purchase a home because they do not have disposable income. The weather has been a factor of home buying because people have not been looking for homes. The weather has increased prices of lumber and building materials. Therefore, the cost of a home would be more and the interest rates would also be higher.