The hype on the so-called recovery in housing ignores the fact that new homes sales continue to fall, despite intermittent stabilization.
More importantly, foreclosures continue to rise and bank inventories of foreclosed properties are growing. Banks are not attempting to sell foreclosed properties because that would require them to take the losses on their books.
However, if one looks carefully at the data, it is easy to discern the negative trends in the housing market. My favorite blogs that analyze housing are Dr. Housing Bubble and Calculated Risk.
Today in the WSJ (pC11) there is an article titled "S&P Puts Mortgage Insurers on Watch." The article explains that the S&P noted with respect to 3rd quarter earnings by mortgage insurers that they "are experiencing a sharper and more rapid transition of delinquencies into prime books of business than we expected." The article continues, "Mortgage insurers have seen claims continue to rise along with home delinquencies and defaults."
The upshot is that with higher unemployment and declining wages, more and more individuals are going to lose their houses. Foreclosures are going to keep the banks and insurers in trouble for some time. That means lending to individuals will remain tight. It also means that the recession is far from over.