Housing's comeback is the most important economic story of the moment -- and maybe the year.
In 2010, our economy seemed to be rounding a corner, and Goldman Sachs led the economic cheerleaders by predicting that the next year would be "the Year of the USA." Then gas prices spiked, growth dropped to 1% in the summer, and we barely got to September without defaulting on our debt on purpose.
In 2011, our economy seemed to be rounding a corner again, with job creation regaining momentum. But so far, 2012 has been a clone of 2011. GDP growth has wavered between 1.5% and 2% (just like last year) and job creation has hovered just under 150,000 per month (just like last year).
Now, for the third straight year, there is cause to wax optimistic in the fall. But this year is different for one big reason: The housing economy truly seems to have turned a corner.
Houses and cars make and break recoveries. In 1971, car and home sales accounted for half of the economic recovery. In 1981, they accounted for a third. But in this recovery, depressed residential investment has been the single greatest enemy of growth. That's starting to change.
Housing starts (i.e.: breaking ground on new homes) are up 25% from last year.