Are there really ”green shoots” of economic recovery? Some economists are wondering if the reports of housing market recovery by Wall Street and the Administration are real or imaginary. John Williams of Shadow Government Statistics argues that the 11% gain for new houses sold in June (following May’s 2.4% gain) was not statistically meaningful. He says that what we’re experiencing is a case of bottom bouncing, with the average rate of homes sold in the last eight months 70% less than 2004 and 2005 levels. He adds that “current year-to-year contractions reflect only a plateauing of housing activity at historic lows, not an upturn or turnaround in economic activity.” The economists we spoke to for our Mid-Year Economic Outlook said that the housing outlook was still very anemic and cited the huge amount of unsold homes and inadequate stimulus plans as a drag on the housing market. For now, it seems, talk of recovery in the housing sector doesn’t have a very solid foundation.
Posts Tagged ‘housing market’
Housing recovery: myth or reality?
Wednesday, July 29th, 2009How much does it hurt?
Monday, June 16th, 2008The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) was released today, demonstrating that home builder’s confidence has fallen again. The index is now at 18, its lowest since December 2007.
“Clearly, conditions in the housing market remain very weak, and our builder members are not seeing any signs of improvement,” said David Seiders NAHB chief economist in a press statement. “Indeed, the continuing erosion of employment and consumer confidence/sentiment, coupled with surging energy costs, falling house prices and rising home mortgage foreclosures, pose considerable downside risks to the economy and our housing forecast. A targeted stimulus such as a temporary home-buyer tax credit would help turn this situation around and restore housing as an engine of economic growth.”
And in a move likely to chip away at some of the U.S. dollar’s recent gains, the Federal Reserve today announced today that it will offer another $75 billion in 28-day credit through its Term Auction Facility, effectively accepting more mortgage based securities as collateral for windows at the Fed’s discount window.
Here’s an invitation for you to comment on these most recent developments: What do you think this means? Is the Fed just digging us in deeper? Or are their efforts having any positive impact on the markets?
So, what do you think?
