The Federal Housing Administration (FHA) has announced plans to reduce its stake in the market, an indication it sees some signs of strength in real estate, CNNMoney reported. The agency, which insures low-down-payment mortgages, is reducing the upper limits of what it will backstop in areas where home prices are high. Starting in the new year, the cap in these areas will drop to $625,500 from $729,750. The agency stepped in amid the housing market meltdown and raised limits so it could help more home buyers. The FHA said the program quadrupled its activity "as the private market retreated." But by doing so, it took also significant hits from defaults, and the agency has been trying to right its own balance sheet.