With year end approaching, the GSEs are due to announce their conforming loan limit for 2005. Analysts explained that the maximum change in the limit - which the GSEs have fully utilized thus far - is determined by the October year-over-year percentage variation in the average home transaction size as reported by the Federal Housing Finance Board (FHFB).

A recent report by Countrywide Securities said that September to September changes provide a fairly good idea of the year-over-year change. However, analysts said that the current data is somewhat distorted by the fact that FHFB's average decreased significantly ($253,900 to $237,900) from August to September 2003. This introduces some uncertainty as to how big the 2003 to 2004 change would be, noting that the average last month rose 3.4% to $243.800.

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