It was mixed news this week in the real estate market. While new housing starts were up after a month of declines, existing-home sales were down 3.8 percent from April.

Lawrence Yun, NAR chief economist, said temporary factors held back the market in May, as implied from prior data on contract signings. "Spiking gasoline prices along with widespread severe weather hurt house shopping in April, leading to soft figures for actual closings in May,” he said. "Current housing market activity indicates a very slow pace of broader economic activity, but recent reversals in oil prices are likely to mitigate the impact going forward. The pace of sales activity in the second half of the year is expected to be stronger than the first half, and will be much stronger than the second half of last year.”

New housing starts were seen mostly in the multi-family housing market, which as homeownership rates decline and rental demand rises across the country could become an even stronger area of interest for investors and builders. NAHB Chief Economist David Crowe notes, however, that access to credit is still tight, leaving new projects out of reach of many builders.

Regionally, the data remained mixed. The South saw a minor rise of 1.5 percent in housing production, while the West had a boom of 18.1 percent. Both the Northeast and Midwest experienced declines, at 3.3 and 4.1 percent in May.

Building permits, on the other hand, many times an indication of future growth, rose in the Northeast, West, and South. The Midwest was the only region experiencing a decline, which was down 1.1 percent.

The economy has continued to struggle and remains weaker than where many analysts had predicted it would be by this time. According to the Federal Reserve, this slower pace of recovery is "likely to be temporary" and "longer-term inflation expectations have remained stable. ... Inflation has moved up recently, but the [Federal Open Market Committee] anticipates that inflation will subside to levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate."

"Household spending and business investment in equipment and software continue to expand," says the Fed. They concede that the housing sector, however, remains depressed.

Many households across the nation have begun to feel the crunch of higher food and fuel prices. Coupled with reduced access to credit and still high unemployment rate, it's no wonder buyers aren't returning to the market in numbers needed for a substantial recovery.

"Jobless claims remain elevated, and this will remain the limpest economic recovery since the Great Depression," said John Lonski, chief economist at Moody's Economy. "This is telling us that we're not making much progress at bringing back the nearly 7 million jobs that have been lost since January 2008."

Unemployment just experienced a rise of 9,000 initial jobless claims for the week ending on June 18th, bringing that number to 429,000 for the week.

Published: June 27, 2011

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Carla Hill, M.A., works on the Realty Times staff as Managing Editor for our online publication. She also is Producer for the real estate news channel, seen daily on RealtyTimes.com and on video newsletters nationwide.