The latest housing price, as captured by the Case-Shiller Index, continued to fall in October. Here are two sharp charts from Calculated Risk.
Accumulated price fall by major US cities:
Combined with latest sales figure, the inventory of existing home sale, after a faked jump due to government’s incentive program, seemed starting to move again. However, the new home sale is still very much depressed.
According to PNC’s Stuart Hoffman, 2012 will be a transition year for the housing market. The hope is that the gradual fall of the housing price may eventually clear the inventory, six years after the last housing peak.
If the economy turns weaker in 2012, the Fed may eventually be forced to buy more mortgage-backed securities. However, the likelihood of any household debt relief program is dim, considering the current fiscal situation. In 2012, we are likely to see a continued muted growth in the US. Now people began to appreciate the importance of housing in driving business cycles. Without robust recovery in US housing market, any talk of V-shaped recovery only sounds foolish.