James Hamilton on the Housing Market
Prof. Hamilton has an excellent post on the housing market. The short version is that the slight decline in the 30 year mortgage rate should help with the decline in the housing market. However, the large supply of existing of unsold homes will be a source of hardship for homebuilders. This hardship will translate into reduced levels of employment in that sector and reduced spending which will be drag for both local and the national economy. The next big thing to watch are sub-prime loans and foreclosures on such properties and fears of price depreciation producing some unfavorable dynamics for the market, and possibly the economy as a whole. In short, moderately good news, but with reason to still be concerned.