July 8, 2011
Eye on the Economy
Housing Data Beginning to Improve, But Policy Headwinds Remain Strong

Good news on housing has been hard to find lately, but the tide may be turning.

House prices ticked up in April after an eight-month decline. As house prices begin to stabilize, they are likely to support improving housing demand. Providing an early sign of a pickup, the Realtors’ Pending Home Sales Index bounced back in May after a sharp decline the previous month. Half the architects recently surveyed by NAHB said their business was improving. And the third consecutive quarter of improvement in NAHB’s Multifamily Production Index points to further growth in multifamily starts.

Not so encouraging, new single-family home sales remained weak in May, townhouse construction is lagging other components of residential construction and construction spending continued its downward trend. Consumer confidence was down again in June. And real GDP growth slowed to 1.9% in the first quarter, with early data indicating a weak second quarter.

Despite polls by NAHB and The New York Times showing that owning a home remains a priority for most Americans, policy debates in Washington over key housing policies continue. The mortgage interest deduction faces continued calls for its elimination or curtailment as policymakers wrangle over measures necessary to address the national debt.

The Congressional Budget Office is forecasting large federal government deficits over the next decade, raising the possibility of tax increases for home buyers, home owners and small businesses. If not scaled back, the deficits will eventually push up interest rates — choking off credit to buyers and builders.

Latest Postings

Analysis by NAHB shows the long-term growth trend in the construction of townhouses as a share of all single-family homes has been greatly interrupted by the Great Recession. Posted: July 7

A recent survey of NAHB members listing their primary business as either architecture or planning and design finds an even split over whether business has picked up, contrasting sharply with the largely pessimistic view of builders. Posted: July 5 

NAHB economist Robert Dietz discusses the tax policy word games behind the claims that tax expenditures like the mortgage interest deduction are tax earmarks or loopholes. Posted: July 5 

Private residential construction spending slid back in May, driven again by the volatile home improvement sector. Posted: July 1 

Complementing recent NAHB survey findings, a new New York Times poll confirms that homeownership remains an important part of the American dream. Posted: June 30 

The National Association of Realtors’ Pending Home Sales Index bounced back in May. Posted: June 29 

The Conference Board reported a decline in its Consumer Confidence Index for June. Posted: June 28 

House prices ticked up in April, ending an eight-month decline, but were well below their year-earlier levels. Posted: June 28 

NAHB economists expect the multifamily sector to lead the recovery in housing construction, leading to both higher rents and rising demand for owner-occupied single-family housing. Posted: June 27

Large federal deficits projected by the Congressional Budget Office over the next few decades raise the possibility of tax increases for home buyers, home owners and small businesses. Posted: June 27 

The final estimate of real GDP growth for the first quarter of 2011 was revised slightly upward to a seasonally adjusted annual rate of 1.9%. Posted: June 24

Sales of new homes were down 2.1% in May, but the three-month average suggests new home sales have leveled off. Posted: June 23

NAHB economist Robert Dietz quells a rumor that the 2010 health care reform legislation will impose a 3.8% sales tax or transfer fee on all home sales in 2013. Posted: June 22
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