Housing Vagaries

My last post was headlined “Housing Climbing Back”.

Oh well.

So much for that.

Today we learned that pending home sales fell for the first time in four months – the index that measures them dropped to 95.5 in April from March’s 101.1. So we are reduced, once more, to making brave statements about how this reduced level is still above its dismal performance of a year ago. Indeed, so bad has the recent past been that even with April’s decline we are still 14.4% better off than last year.

Was it really that bad?

Yes it was.

We also heard today that the Case-Shiller index of home prices was unchanged in March, and was 2.6% down on last year reaching a new post recession low.

Upon reading this data the stock market went into one of its swoons, as if no one there had realized that the real estate market sucks. So much for efficient hypotheses and other such nonsense.

The endless sideways drift in housing, sideways with a slight upward tilt, is emblematic of our entire economy. Things are getting better, but at such a halting and sluggish rate that it is sometimes difficult to tell in which direction we are drifting. We should expect more bumps as we meander about. Especially in real estate which was at the epicenter of the crisis and which depends so heavily on consumer sentiment and willingness to make longer term bets.

Add in the determined effort in Europe to self-destruct, the slippage in growth in both China and India, and we have a brew supporting low growth here in the US.

Rotten economic policies have real consequences. While we have not been quite as bad as the Europeans – no one surely could – we have done precious little to bolster our economy. Instead we have been content to watch as large chunks of future potential wealth are carved away to produce a diminished trajectory. All those idle resources we seem to be happy to abandon, all that investment we seem to be happy not to make, all that cheap debt we are happy not to borrow, and all those long term unemployed we are happy to impoverish, will come back to haunt future generations of Americans. We decided, carefully, deliberately, and with well thought out precision, to make ourselves poorer.

If you like that scenario – well done.

If you are like me and detest it, then the vagaries in the housing market are just one more emblem of the utter failure of our elite to provide us with assured, strong, and capable leadership.

Sad.