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Home Publications Blogs Beat the Press The Data Say the Housing Market Is Not in Poor Shape

The Data Say the Housing Market Is Not in Poor Shape

Thursday, 13 September 2012 04:29

A Morning Edition segment on the Fed's likely actions included a comment from Karen Dynan, the co-director of economic studies at the Brookings Institution saying:

"our housing market remains in very poor shape. It may have turned the corner, but conditions still look pretty bleak."

Actually house prices are pretty much back on their long-term trend path. The current sales rate is also at or above its trend level. It is true that house prices are still well below their bubble peaks, but that should be expected. It would be unreasonable to expect the Nasdaq to return to the prices it reached at the peak of the stock bubble. Similarly, there is no reason to expect (or want) house prices to return to their bubble peak. 

Comments (1)Add Comment
Apparently the Fed Disagrees
written by Paul, September 13, 2012 12:55
Purchasing $40 Billion a month of MBS would seem to suggest that the housing market is in very bad shape. But then, Ben Bernanke is a Keynesian so his view of increasing consumer demand is quite different.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.