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Deutsche Bank: Here's Why Housing Will Sink GDP Next Year

Peter Hooper at Deutsche Bank doesn't expect much of a housing recovery next year. In fact, he believes that housing prices could drop further, and weigh down on Americans' consumption. This in turn will drag down GDP growth... "Our update of the outlook for the US housing sector suggests that residential construction is likely to remain depressed for another year. The overhang of vacant homes remains elevated despite the historically low level at which residential construction has been running relative to GDP. Adjustment of the housing overhang has been slowed by a depressed rate of new household formations. Our analysis suggests that household formations could remain subdued for another year or so in lagged response to the economic downturn and tightening of credit conditions."

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