Existing home sales took a huge and unexpected jump upin December.
Not only was the seasonally adjusted monthly increase up over 12 percent, but the unadjusted number was even higher.
The question of course now is, given that inventories always rise this time of year, can this sales surge be sustained?
The biggest roadblock in the housing market today is financing, and financing is now on the main table in Washington, as the Obama Administration sets to release its plan to reform Fannie and Freddie and as federal regulators decide what exactly constitutes a Qualified Residential Mortgage under Dodd-Frank's risk retention requirement. A QRM exempts the bank from having to hold on to 5 percent of the loan, when it sells the loan off into the marketplace (skin in the game). There is also renewed talk of dropping the mortgage interest deduction.
Today a new contributor joined CNBC. Michael Barr recently left his post at Treasury as Asst. Secretary for Financial Institutions. He was behind the Administration's mortgage bailout, Dodd-Frank and was in discussions on Fannie and Freddie reform. He says don't get excited for a big roll-out on Fannie and Freddie because the Administration knows what its up against.
"There’s a real debate going on now about just how far to go in this report that Treasury’s going to put out at the end of the month," says Barr. "I think the situation has become much more difficult politically given the ascendancy of the Tea Party and the House Republican takeover."