Is a Double Dip Possible in US Housing Sector?
Today's data about existing home sales woke fears about the possibility of a double dip recession in the US housing market. Sales have plunged at an annual pace of 3.82 million well under analysts expectations. It's about the worst data since 1995.
In my opinion, housing market looks weak and fragile. Foreclosures are pressing the market with a huge offer meanwhile demand isn't enough because of the weak labour market situation.
Despite the major offer, the median price rose 0.7% interannually to $ 182.600. This could be see as a stabilization sign, but it's not enough.
If labour market doesn't react, we cannot expect a recovery in the housing market. Personal income must improve to create better conditions in the economic scenario. Confidence is the key but to get it you need to restablish job situation and for this you must grow in a sustainable way.
Another important thing is related with public stimulous through tax benefits. It is necessary to provide public support when private economics is not so strong.
To avoid any chance of a double dip economic secenario, we need stabilization in the housing and labour markets. That's not happening yet, but we hope that financial markets will soon recover and be on an uptrend.