Even after revisions, the assertion is that the U.S. pulled out of recession in the third quarter. Nouriel Roubini gave this warning last June though:
One cannot rule out a couple of quarters of sharp GDP growth as the inventory cycle and the massive policy boost lead to a short-term revival. But those tentative green shoots that we hear so much about these days may well be overrun by yellow weeds even in the medium term, heralding a weak global recovery over the next two years.
He was speaking about the global economy, but the same holds true for housing. The "recovery" is W shaped, and we are headed into the back half of the W: [Hat tip Freedoms Phoenix]
Home prices are enduring an early winter chill, raising the odds that the economy may suffer another jolt while it is still weak.
Two price indexes released Tuesday indicated that the momentum the housing market showed over the late spring and summer is faltering, even as the government said the economy grew at a slower pace in the third quarter than previously reported.
The Standard & Poor’s/Case-Shiller home price index, a closely watched measure of the housing markets in 20 metropolitan areas, barely rose in September, rising 0.3 percent from August on a seasonally adjusted basis. Prices fell for the month in nine cities in the index, including Boston, New York, Seattle and Charlotte, N.C.
A report from the Federal Housing Financing Agency showed that prices were flat in September from August.
Real estate, which has traditionally brought the economy out of recession, seems increasingly likely this time to hold it back. The housing market’s epic boom early this decade has turned into an epic bust whose effects may take years to shake off.
The housing market is confronting an abundance of inventory, high unemployment, fearful consumers and devastated family balance sheets.
“There is no clear, easy way out for housing,” said John Silvia, chief economist at Wells Fargo. “Contrary to my hopes, housing prices and the housing market in general will weaken again.”
I maintain that there never was a recovery in housing. Massive government interference in the housing market was able to generate the appearance of "stabilization", but the fact remains that this pseudo-stabilization is not sustainable. Genuine stabilization is years away.
Never before have tax payers paid so much to achieve so little. What a waste.
The October sales increase was mostly likely the rult of the tax credit ending. Now that it has been extended (and likely will be again) there is no rush to buy, and house sales in the coming two months will very likely be down. . .it is like Macy’s which has constant sales – there is no rush to buy today, because there will be a better sale tomorrow. With rents still coming down in mosts parts of the country, those “investors” who bought in the Spring of 2009, may find they have empty houses.
Sorry – should have said, “result of tax credit” . . .fingers moving faster than brain in early morning here. . .
BTW – my tracking of “reduced rents” on Craigslist which I have mentioned here before (started tracking in January 2008 with about 55-60 listings a day) just hit a record this week in San Diego with 335 “reduced rents or reduced deposit, etc.” a day. Seems all those jobless “kids” are moving back home.
Mark-
I agree completely. I think I was reading that loan defaults for 2009 originations are already at 17%. Too many wannabe moguls watching too many late night infomercials.
Household formation is down, so how could things possibly not get worse?
Uh Oh, reduced rents will hamper CPI and cause a DEFLATION reading which will drive the FED nusto. Too funny.
I think I saw a Favicon in “Transfromers II”, but it looked a bit different that the Housing Doom one.
Happy Thanksgiving, have some fun.
Never before have tax payers paid so much to achieve so little. What a waste.–twist
We got two quarters of anemic 2.5% increases in GDP, but it looks as if the expansion is about to stall. Unemployment will remain persistently high, which will hamper a housing recovery for years to come.
Good point, Malthus. They had to pump trillions of printed dollars into the economy to finally generate what should be our typical GDP growth.
Maybe I’m the only one who finds it funny, but I think I’ve seen one finance article that actually said last quarter’s 3.5% GDP growth (revised down since then) was annualized. Like if they don’t include that, everyone will assume it’s just for that quarter and 14% annualized–just like that we’re booming again.