Another demand-depressing factor has been the trend toward young adults living with their parents or an additional roommate, rather than forming their own new households. Household formation traditionally creates demand for smaller or less costly starter homes, the sales of which, in turn, allow current homeowners to buy larger or more expensive residences.
"What we have today is a weak recovery in the labor market, which is holding back some of the household formation," Yun says. "The only way to unleash this household formation is to have strong consistent job growth."
The national unemployment rate stood at 9.1 percent, or nearly 14 million people, in May. Another 8.5 million people were employed part time, but wanted full-time positions.
Homeownership loses appeal
Sharga points to a shift in consumers' attitudes toward homeownership as a factor in the housing sector's weakness: People aren't as interested in buying homes as they used to be. One recent RealtyTrac survey found that a huge percentage of today's renters don't want to buy a home -- ever.
"No one wants to catch that proverbial falling knife (of lower home prices) and no one wants to become the next foreclosure statistic, so it really is an issue," Sharga says.
Like the slower household formation, that lack of homebuying enthusiasm translates to less demand for entry-level houses and less opportunity for current homeowners, who might not have much equity, to trade up to another home.
So what will it take to get housing back in action? In short, a chain reaction of a robust economy, strong job growth and more household formation, easier credit, fewer foreclosures and an absorption of the existing excess supply of for-sale homes.
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