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Housing hope won't stop a recession

Tuesday, July 31, 2012 - 01:42

July 31 - The rise in U.S. home prices for the 4th month, according to a new survey, is good news for the sector. But given growing economic trouble spots, it may not be enough to prevent another recession, according to Yale economist Robert Shiller. Bobbi Rebell reports.

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Home sellers could squeeze a little more money out of their property- prices rose for the 4th month in a row in May according to the latest S&P Case-Shiller index. Survey co-founder and Yale economics professor Robert Shiller: SOUNDBITE: ROBERT SHILLER, CO-FOUNDER S&P CASE-SHILLER INDEX, YALE PROFESSOR (ENGLISH) SAYING: "The latest price increase was 2.2 percent in one month. Now part of that is seasonal. But it is definitely bullish for the housing market. " It's also bullish for the builders, who have said home buyers are taking advantage of record affordability and rock-bottom interest rates. Shares of home builders have been on the rise. The Standard and Poor's home builder index is up close to 50 percent this year. But the reality is that housing makes up a smaller share of the economy than before the recession- so it can only provide a limited lift to the broader recovery. Consumer spending, which makes up 70 percent of U.S. economic activity, fell in June- and savings jumped- a sign consumers are fearful of what's around the corner. SOUNDBITE: ROBERT SHILLER, CO-FOUNDER S&P CASE-SHILLER INDEX, YALE PROFESSOR (ENGLISH) SAYING: "We could have a recession. You know we - our last recession began 5 years ago or almost 5 years ago in 2007. It's about time. You know our history shows that we have periodic recessions so I wouldn't be surprised." And that could circle back to knock down housing, which cannot grow long term without the job growth and other economic drivers of a broader recovery. Bobbi Rebell, Reuters.

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Housing hope won't stop a recession

Tuesday, July 31, 2012 - 01:42