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

Jan. 5 (Bloomberg) -- What will the New Year bring forhousing markets? Prediction is a perilous business, but historyand basic housing economics suggest that price changes will staymodest, and that construction will increase only slowly. Thebest that can be said about the current market is that it offersabundant affordability and that the broader economic recoverydoesn’t depend on a big housing rebound.

The most recent S&P/Case-Shiller housing-price data show asecond month of seasonally adjusted price declines. The overall20-city index dropped about 3.4 percent from October 2010 toOctober 2011, after falling less than one percentage pointduring the previous year. In nominal terms, the 20-city index isat the lowest point since March 2003, and in real terms, we’rebelow where we were in October 2001.