Housing sector slowly coming back to life

The housing market continues to make gains this year but a return to healthy levels is probably still years away. 

The latest monthly housing barometer from Trulia shows that, overall, the sector is 34 percent of the way back from its worst point back to normal levels. 

That is up from 32 percent in June and from 18 percent in July 2011. 

Construction starts held steady in July, while sales were up from their low June level and the delinquency and foreclosure rate dropped back down. 

"At this rate of recovery, the market should reach 'normal' in late 2016," said Jed Kolko, Trulia's chief economist, in Thursday's report. 

Still, housing economists have said they expect the pace of the sector's long downturn to pick up next year, which should boost hiring and overall economic growth. 

As the market recovers, neither President Obama nor Mitt Romney, who will accept the GOP nomination on Thursday night, has put housing at the fore of their campaign issues. 

Last week, David Crowe, chief economist with the National Association of Home Builders (NAHB), told The Hill he was perplexed by the lack of discussion about what can be done to boost the battered housing sector, which was central to causing the 2008 financial crisis. 

On Wednesday night, Romney's running mate, Paul Ryan, said only that the Obama administration ends its term "with a housing crisis they alone didn’t cause."

The GOP's platform on housing calls for scaling back the government's role in the mortgage finance industry — winding down Fannie Mae and Freddie Mac — which Republicans say has discouraged private sector investment, stalling the housing recovery. 

The Trulia report looks at three indicators — construction starts, existing home sales and delinquency and foreclosure rate. 

For July, construction starts are 26 percent back to normal with 746,000 at an annual rate, down 1.1 percent month over month but up 21.5 percent year over year.

Existing home sales have bounced back to 40 percent of normal from their lowest level during the housing bust. Sales rose to 4.47 million in July from 4.37 million in June, but they are at the second-lowest level of the year with tighter inventory and lower vacancy rates holding back sales. 

In the final indicator, 11.11 percent of mortgages were delinquent or in foreclosure, after jumping up to 11.23 percent in June. They are 36 percent back to normal. 

States that handle foreclosures through the courts — Florida, New Jersey, Illinois and New York — still have a large pipeline of foreclosures to work through, the report said.