NAR PRESIDENT SAYS FED DECISION IS GOOD FOR HOUSING

WASHINGTON (August 9, 2006) – The decision yesterday by the Federal Reserve’s Federal Open Market Committee not to raise the federal funds rate for the 18th straight time indicated that the Federal Reserve recognizes the value of the housing economy to the national economy as a whole, the president of the National Association of Realtors® said today.

“This move sends a very positive signal to the housing sector, which has been so robust over the past five years that it has sustained the economy while other sectors have lagged. Largely as a direct result of more than two years of interest rate hikes, the housing market today is fragile in some parts of the country. The Fed’s decision indicates that it realizes the vital role housing plays in the economy,” said NAR President Thomas M. Stevens, senior vice president of NRT Inc.

The decision by the FOMC leaves the banks’ prime lending rate, the benchmark for various consumer and business loans, at 8.25 percent. Before the Fed started raising rates in June 2004, the prime had been at 4 percent.

Stevens said the Fed’s decision indicates it realizes the economy has slowed, especially the housing economy. “We can’t continue to raise rates without expecting the housing economy to suffer. That translates into higher costs for home buyers, slower sales and a lower level of economic activity in housing, which accounts for one-fourth to one-fifth of the gross domestic product,” he said.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

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