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Housing market recovery underway




It is now abundantly clear that the U.S. housing market is recovering. From the all-time lows registered in April of last year, starts have now risen 40%. To be sure, the level of activity is still dismally low, but that a recovery is underway is virtually certain. The Bloomberg index of home builders' stocks has been saying the same thing for some time now, with the average stock up 125% from last year's low. Recovery skeptics have been telling me for many months that a true recovery can't happen without a recovery in housing; if they are right, then this is pretty good news indeed. Regardless, I view this as just one more of many signs that the economy is in recovery mode. The only item of debate at this point is how fast the economy will recovery, not if. I see no reason to change my long-held expectation of 3-4% growth, which amounts to a moderate recovery, albeit one in which a lot of V-shaped sector recoveries, like this, can be found.

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