Federal Reserve officials agree the housing market improved slightly the last few months of 2011, but the growing inventory of distressed and foreclosed properties keeps stunting growth.

At its meeting on Jan. 24-25, the Federal Open Market Committee voted to keep the target fed funds rate at next to nothing, where it’s been for more than three years. The FOMC said it will probably keep the rate at 0% to 0.25% through late 2014, as well.

Some members said economic conditions, including high unemployment and inflation at or below the FOMC objective, “could warrant the initiation of additional securities purchases before long. Other members indicated that such policy action could become necessary if the economy lost momentum or if inflation seemed likely to remain below its mandate-consistent rate of 2% over the medium run,” according to the minutes of the January meeting.

In November, the Fed began its plan to purchase up to $600 billion of longer-term Treasury securities by the end of the second quarter "to promote a stronger pace of economic recovery and help ensure that inflation, over time, is at levels consistent with its mandate."

At the January meeting, members said home price uncertainty and tight underwriting standards for mortgages also hurt the housing recovery.

The FOMC noted a substantial deceleration in foreign economic activity in the fourth quarter, as retail sales and industrial production were below third-quarter averages in both October and November in the eurozone.

The Fed said “market sentiment toward Europe appeared to brighten a bit” at the end of 2011, but the financial crisis overseas remains a central focus for investors.

The FOMC meets again March 13.

jphilyaw@housingwire.com