Does Janet Yellen Hold the Strength of the 2014 Housing Market in Her Hands?

Janet Yellen who takes over as chairman of the Federal Reserve if the Senate confirms her in a vote scheduled for next week, will hold significant sway over the direction of the U.S. housing market in 2014. 

Following last year’s jump in prices that rivaled gains during the housing boom, Yellen will guide the winding down of the Fed’s bond-buying program that influenced mortgage rates for five years.

If Yellen tapers too quickly, investors could panic, causing mortgage rates to surge. If the new chairwoman goes too slowly, low rates coupled with an improving economy will cause the housing market to overheat.

Home prices probably will rise about 5.3 percent in 2014, half the pace of 2013, according to the Realtors association. Sales of existing homes will total 5.1 million in 2014, matching last year, the trade group predicts. Whether any of the housing forecasts are accurate depends on what Janet Yellen does, and no one really knows what that will be.

Source: Homebuyers Missing Housing Rebound Depend on Yellen, Bloomberg (Jan 2, 2014)