Bouncing along the bottom

The housing market recovery has yet to begin with activity more or less bouncing along the bottom. Home sales did edge further above their post-tax credit low in September, but they remained 20% below the level seen a year earlier. More worrying is that, despite record low mortgage rates, mortgage applications for home purchase have hardly risen at all. That suggests the cost of borrowing is not the problem. Instead, high unemployment, heavy indebtedness and widespread negative equity mean many households are unable or unwilling to borrow. By introducing even more uncertainty, the recent foreclosure crisis won't help either.