| From FT: For a very pleasant change, this week's data on US housing is ground for some relief. The supply of unsold houses is reducing, sales have stopped falling and prices are falling less swiftly than they had been.As far as they go, all of these factors are positive. House prices are crucial to the fate of the dubious collateral held by financial institutions which has driven the credit crisis. If prices recover, defaults should be lower, and the ultimate damage to mortgage-related securities should be less.
But it is too soon to call an end to the housing crisis. Housing is seasonal, and prices and sales usually look healthiest in the spring months. These trends must be sustained for some more months before much weight is put on them.Further, demand for houses depends on their affordability. For this to improve without falls in house prices, either incomes must rise or mortgage rates must fall. Americans' real incomes are not increasing. Mortgage rates are thus critical..... Full Article: Source
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