The Question Is How Strong Will the "Recovery" be ?

Housing: How Strong a Recovery?

The U.S. housing slump is levelling off, but whether it grows into a lasting recovery will depend on how heavily the housing market is leaning on the government's crutches, and how long Washington is willing to keep those supports in place. Barclays Capital economist Michelle Meyer puts it this way: The debate has shifted from 'Is the housing market recovering?' to "How strong will the recovery be?" Despite the recent reassuring signs, Barclays still expects the S&P Case-Shiller home price gauge to drop another 8 percent through the first quarter of 2010, bringing the total decline to 36 percent since the housing market peaked. Between the quasi-nationalization of housing finance companies Fannie Mae and Freddie Mac, the Federal Reserve's $1.45 trillion commitment to buy mortgage-related assets, and an $8,000 tax credit offered to entice first-time home buyers, the amount of public money propping up housing is massive. Three reports due this week are likely to sh ow these efforts are helping to reduce the glut of unsold homes and restore at least some confidence: The National Association of Home Builders releases its U.S. housing market index, and its expected to be better; figures on September housing starts and building permits are expected to inch up; and existing home sales for September is also expected to be up a bit.