Nagging Foreclosures Preventing Housing Recovery

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Nagging foreclosures are preventing housing recovery – linked with economic health is the housing sector. It is this sector that has always traditionally pulled up the economy from bad days. But this time there does not seem to be much hope; in fact it is hampering the recovery.

Eric Rosengren of Boston Federal Reserve Bank (president) referred to the housing sector as “moribund” while delivering a speech. She said, “I expect housing will not provide as much support to this recovery as it has in previous ones”.

More pessimism was shown by Avery Shenfeld of CIBC (chief economist). He opined that the weak housing market would pull down consumer spending during the second half of this year. He forecasted an economic growth to be on an average 2.6% in the current year; with house prices consumers will be compelled to be cautious.

Joel Naroff of Naroff Economic Advisers (president) said that the current year would see a period of transition with the housing segment of the market “not going anywhere”. Naroff explained that construction is not strong because foreclosure catastrophe has attacked those regions where construction was the strongest.

According to some experts although the construction has reached a point of leveling it is not showing any indications of recovery. Building permits are at record low levels since 2009 April. The figures on housing starts and existing sales are yet to be released.

MarektWatch conducted a survey on economists largely agreed that the sale of residences will increase by 3.2% – the annualized number being 4.83 million last December after sales picked up to 5.6% as compared to November.

But this would take back the numbers of 2007 as well as 2008 prior to the tax credit incentive offered to buyers of residences by Washington. This had created in the market much unpredictability observed Paul Dales of Capital Economics based in Toronto (senior economist).

Apart from figures on housing, the pundits would also be closely monitoring the latest reports rolling in about applications for jobless benefits. It is being said that the claims surged recently by 35,000. The highest number noted was 445,000.  However the analysts think that this increase could be because of technical snags. Data from few weeks more would be required prior to coming to any final conclusions.

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