The big non-Supreme Court news this morning comes from another hard-to-read, highly-watched, and slow-moving American institution: the housing market. Sales of single-family homes -- which non-economists often call a "house" -- surged 7.6 percent to the highest point since April 2010.
Home building is expected to contribute to the economy for the first time in seven years, Reuters reports.
But here's the chaser: Seven years ago, in 2005, new home sales were four times higher than they are today. A combination of foreclosures, underemployment, market uncertainty, and tighter credit has created a oversupply of previously-owned homes. And as this graph from Calculated Risk makes clear, we are still a long, long way from normal -- not to mention the abnormal highs from the mid-2000s.
If there's cause for long-term optimism, you can find it, somewhat ironically, in last week's dismal news that multifamily households rose by 1.9 million between 2007 and 2010, as adult children and elderly parents moved back in with their Gen-X and Boomer relatives. In those three years, multifamily households grew nine times faster than overall households.
Why's that good news in the long run? Because it suggests a major bottleneck in demand for housing. Even if the economy never achieves break-away 5% growth or something like that, young people will move out of the basement eventually and settle in apartments, condos and single-family homes.