Weak U.S. housing rebound slows economic growth for 2011

January 12, 2011 12:36PM

Held back by foreclosures, the pace of the housing market’s rebound will be so weak that it won’t be much help in spurring economic growth, Bloomberg News reported. According to Fannie Mae, home prices will probably start to gain in the third quarter of 2011, and rise .6 percent for the year, the first annual advance since 2006. Economists predicted last month that residential investment, an inflation-adjusted measure of homebuilding, will increase 9.6 percent in 2011 after five years of declines to a record low. “There’s a good chance of a housing turnaround this year, but it’s not going to be enough to give much help to the economy,” said Karl Case, co-creator of the S&P/Case-Shiller Index that tracks U.S. home prices. “We’re coming off 50-year lows and we still have to deal with the foreclosure mess.” According to estimates by the Mortgage Bankers Association and the National Association of Realtors, home sales and construction will rise in every quarter of 2011. But the biggest challenge to the overall recovery may be lender delays in pushing through foreclosures, said Mark Zandi, chief economist at Moody’s. [Bloomberg]