FORTUNE — The Federal Reserve on Wednesday pressed ahead with its stimulus program of asset purchases and low interest rates. Yup, as widely expected (and reported), the end of its two-day meeting was pretty much a snoozer: For the most part, the central bank made few changes to its description of the state of the economy, saying that it has “continued to expand at a moderate pace” and job markets “have shown further improvement.”
What’s interesting, however, is that policymakers slightly changed their views of the housing industry, acknowledging that the recovery has “slowed somewhat in recent months.” It was only at its last meeting in September when the central bank said the housing industry was “strengthening.”
Whatever the Fed’s take, it would be short-sighted to read too much into it. After all, what the central bank chooses to say and not say is puzzling. Even though the government shutdown cost the U.S. economy billions of dollars, it made no direct mention that Uncle Sam was partially out of business for more than two weeks.
And yet, the Fed chose to bring up the state of the housing market. True it has modestly slowed down, but that’s inconsequential because the recovery is nowhere near reversing. Home prices are rising more slowly now than in the spring, but they’re still climbing fast, writes Jed Kolko, chief economist at real-estate website Trulia.
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One main reason: Nationally, and in all of the 100 largest metro areas, it’s still significantly cheaper to buy than rent, Kolko says. Mortgage rates have made buying more expensive; the 30-year fixed rate is now 4.8% compared with 3.75% a year ago. And as a result, the cost gap between buying vs. renting has narrowed. A year ago, it was 45% cheaper to buy than rent in the U.S. That has fallen to 35% today, but the cost incentive to buy is still substantial.
There are caveats, of course, where it’s harder to justify the costs of buying over renting. Across several parts of California such as San Francisco, San Diego, and Los Angeles, buying isn’t that much cheaper than renting, according to Trulia. However, buying is a bargain in places like West Palm Beach, Fla., as well as parts of Ohio and Michigan.
Meanwhile, U.S. home prices have continued to recover, which gives those on the fence about selling a reason to put their home on the market and help stabilize prices. In August, prices rose at their fastest annual pace since February 2006 — the height of the housing bubble, according to the latest reading from the S&P/Case-Shiller Home Prices Indices. On average, prices are back to their mid-2004 levels, but still roughly 20% below their summer 2006 peak.
Both home prices and mortgage rates are rising from record lows. So whatever worries the Fed has about the economy, it likely has less to do with housing than uncertainty surrounding Washington.
