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Don’t Count on Housing Market to Lead Recovery: Edward Glaeser

Jan. 5 (Bloomberg) -- What will the New Year bring for housing markets? Prediction is a perilous business, but history and basic housing economics suggest that price changes will stay modest, and that construction will increase only slowly. The best that can be said about the current market is that it offers abundant affordability and that the broader economic recovery doesn’t depend on a big housing rebound.

The most recent S&P/Case-Shiller housing-price data show a second month of seasonally adjusted price declines. The overall 20-city index dropped about 3.4 percent from October 2010 to October 2011, after falling less than one percentage point during the previous year. In nominal terms, the 20-city index is at the lowest point since March 2003, and in real terms, we’re below where we were in October 2001.