Recent remarks by Federal Reserve (Fed) officials, which partly bolstered optimism that financial markets will recover later this year, helped mortgage rates ease up a little this week. Federal Reserve Chairman Bernanke indicated in a speech on May 13th that the Fed stands ready to continue to add liquidity to the markets. On the same day, San Francisco Fed bank president Janet Yellen added that she anticipates inflation will slow as commodity prices level off in the second half of the year.

The first three months of the year, however, was bleak for the housing market. The median sales price of existing homes fell 7.7 percent in the first quarter of 2008, the largest four-quarter decline since the National Association of Realtors began collecting data in 1979. Two-thirds of the 149 large metropolitan areas had negative annual declines. The sales pace fell in forty-six states and the District of Columbia, while sales for the nation as a whole were the lowest in ten years.

Nonetheless, there was positive news on the overall state of the economy. Retail sales (excluding automobiles) rose 0.5 percent in April, over twice that of market forecasts, and there was a significant upward revision in March's figures as well. Also, the consumer price index for April rose less than expected, allaying some market concerns of inflation taking hold.