By Ian McKendry

WASHINGTON (MNI) – Major U.S. housing indicators painted a bleak
picture of the market in February, but many economists believe a housing
rebound may not be needed for a broader economic recovery.

David Onyett-Jeffries, economist at RBC, told Market News
International Wednesday that “we are seeing a moderate pickup, but again
because the level of activity is so low it is not exactly going to have
any significant contribution to growth in the U.S.”

This is an opinion shared by Ian Shepherdson of High Frequency
Economics, who in a research note said, “We should make it clear that we
do not regard a rebound in home sales and prices as an essential driver
of broad economic recovery”

The expectation of economic growth without the aid of housing is
also evidenced in GDP projections. For example, against a backdrop of
oversupply, negative equity, tight lending standards and high
unemployment, the Blue Chip forecast for 2011 real GDP growth is +3.1%.

A U.S. Census Bureau report published Wednesday showed new home
sales were at record lows in February — falling 17% to a 250,000
seasonally adjusted annual rate.

This followed a disappointing existing-home sales report by the
National Association of Realtors Monday, in which existing-home sales
fell 9.6% in February to a seasonally adjusted annual rate of 4.88
million after improving in January and December.

However, RBC’s Onyett-Jeffries said the level of activity in the
housing market is at such low levels that even small changes can cause
big swings in the reports.

“We are bouncing along the bottom — the recent slew of housing
reports are not exactly great but they haven’t fundamentally changed our
outlook yet because our outlook is not overwhelmingly rosey,” he said.

A survey of 111 economists, real estate experts and market
strategist published Tuesday by MacroMarkets suggests housing prices are
unlikely to recover until 2013.

“Overall, the sentiment among our expert panel regarding the U.S.
housing market outlook continues to deteriorate,” Robert Shiller,
co-founder of MacroMarkets, said in a statement accompanying the survey.

The housing market is not necessarily going to be a drag on the
economy “and not going to be a huge boost,” Onyett-Jeffries said.

** Market News International Washington Bureau: (202) 371-2121 **

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