housing market trends 2011

The housing market remains a drag on the economy, but there are indications that it is finally starting to bottom.

Prices have stopped declining, and there is even some sign of life in sales.

Not all the news is good, of course. New home sales dropped still further in August from July, falling to a pathetic 295,000 annual rate compared to the 1 million-plus in the good years. And housing starts fell to an annual level of 571,000 from 601,000 in July - that's 12% below their August 2010 level.

Still, this is to be expected. The new home sector should be the last to turn up. There is a massive overhang of existing homes, both through foreclosures and through suppressed sales from homeowners that are "under water" on their mortgages and can't afford to sell.

With the exception of a very few markets - such as North Dakota (4% unemployment and new jobs appearing from the Bakken oil shale) and the overstuffed bureaucrat haven of Washington and its surrounding suburbs - there should be very few new homes built for the next several years.