Housing

Why the Housing Market Is Still Stalling the Economy by Neil Irwin

None of that, however, can happen instantly through some policy change, like a tweak in federal housing rules to make it easier to get a loan, or further measures from the Federal Reserve to lower mortgage rates. More than anything, it takes time. 

Mr. Kelderhouse says that 2017 “is the year everybody throws out as when we’re back to normal. He adds, “That still seems believable to me.”

How and Why Is Housing Holding Back the Recovery by Dean Baker

The other point is that looking at the historic average share of residential construction in GDP may be somewhat misleading. If we go back to the 1980s, the share of medical care in GDP has risen by more than 6.0 percentage points. This increase must come from other categories of consumption. If we say non-health care consumption is roughly 60 percent of GDP, then a 6 percentage point rise in the share of health care in GDP would imply a reduction of 10 percent in non-health care consumption, if the consumption share of GDP stayed constant. 

In fact consumption has risen as a share of GDP, but if we assume the consumption share will not rise indefinitely, it means that a rising share of consumption going to health care means a smaller share going to everything else. The implication is that we might expect housing to comprise a smaller share of GDP going forward than in the past. In that story we should still expect housing to recover further, but perhaps not to its average share for 1970s, 1980s, and 1990s.

Maybe QE Was Helping A Little More than You Thought by Jared Bernstein

Still, one cannot help but notice the recent slowdown in the housing recovery and one further cannot help but wonder about the extent to which Fed actions to pull back on their LSAPs are implicated in said slowdown, though there are of course other moving parts here. 

First, there’s no doubt that the housing recovery has significantly slowed. According to a Credit Suisse index, homebuyer traffic is down more than a third from last year, and yesterday’s new home sales were off big-time, with sales down 13% from a year ago, the first yr/yr decline since 2011q2. Pending home sales have also been negative in recently months and recently hit their lowest level since late 2011.