The Data Say the Housing Market Is Not in Poor Shape

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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.