Has the housing market stabilised in the United States? The question is hard to answer. Housing prices in the US for instance have maintained a downward slope since 2007. However, there are also signs of recovery where one could see that the delinquency rate for residential mortgages is no longer rising. These mixed signals suggest that one needs to maintain a close watch on the American Housing markets because market signals continue to contradict each other.
The foreclosed homes in the US have dented the housing market big time. With a lackluster economy that refuses to generate jobs for the millions who are now unemployed, the morale of the American consumer is low, thus keeping the housing markets down.
There were some celebrations by speculators since the starts were down by only 1.5% over the last month. Thus a less than expected decline in housing starts prove to be a good news!
The reality remains as unemployment rate remains consistently high over the years, the housing market continues to perform significantly lower than its historical highs.
“A bloated inventory of unsold homes and a weak economy are weighing down on the housing market, whose collapse was the main catalyst of the 2007-2009 recession. A large foreclosure pipeline also is not helping, leaving builders with little incentive to break ground on new projects.”
The latest figures for the US housing starts continue to portray a dismal picture. The housing starts are at historic lows in the US showing a collapse in demand for new housing units.
Many observers are looking at the short term gain in housing starts that shows a six month high in housing starts for June 2011. However, the long-term picture (see the graph below) suggests otherwise.
The reports on the labour market in the US suggest improvement. Job losses have either disappeared or are falling. Still, most housing markets in the US continue to paint a dismal picture. Take New York for instance, where the housing prices started to collapse in 2007. Four years later, the housing prices are still nowhere near their peak in 2007.
It suggests that the structural issues underlying the housing price decline have not yet been resolved and thus the housing market continues to falter.
The recession might be over, however, the housing starts in the United States are still in the dumps. The annualised housing starts in January were significantly lower at 596,000 than any other January since late 1950’s. These numbers suggest that the housing market recovery in the states has not yet started.
