How Your Gift Shopping Affects the Housing Market

NEW YORK (TheStreet) -- The housing market is quieting in late November as consumer focus turns from mortgage application fine print and open houses and toward the holidays. But the long-range view for the much-maligned housing sector is as positive as ever.

The Mortgage Bankers Association reports that mortgage applications dropped by 2.2% last week, not exactly a surprise for the busy week leading up to Thanksgiving and serving as the kickoff to the holiday season.

That weekly snapshot, while important to monitor, is likely an outlier for an otherwise healthier U.S. housing market.

Another report, from Fannie Mae, says higher consumer spending, which makes up 70% of total U.S. gross domestic product, sees a "gradually strengthening housing recovery." That growth is expected to "increase" next year, Fannie Mae's Economic & Strategic Research Group says.

"The tone of the economic data we've seen during the past month has been modestly favorable, but our expectations for growth this year remain subdued," Fannie Mae Chief Economist Doug Duncan says. "While the pickup of activity in the third quarter is encouraging, it is compared to the weak pace seen in the second quarter and doesn't portend a robust recovery in the near term. More encouraging, perhaps, is that the slight increase in consumer spending appears to have fed into the overall housing market data, particularly home sales and starts."

A third piece of favorable housing data, this one from Zillow (Z), shows that U.S. housing growth is indeed sustainable.

Any long-term housing upswing is a huge positive for the U.S. economy.

Various economists have long held that a vibrant housing market is a healing salve for consumers, who consider their homes their most valuable financial asset. When that asset is losing value, Americans tend to hunker down and spend less. But when home values are up, consumers open up their wallets and pocketbooks and, in the process, boost the economy.

Zillow reports that U.S. home values rose in October, with median home values up 1.1% from September. The hike was the highest since August 2005, when Zillow's Real Estate Market Report showed a 1.2% increase.

It's all about affordability, as housing fell into a financial abyss in 2008 and is really just beginning to climb out, Zillow says.

"We've reached a milestone with one full year of monthly home value gains," Zillow Chief Economist Stan Humphries says. "Skeptics will point to the large role that investors are playing in the recovery or to the large number of foreclosures yet to hit the market as factors to be wary of. But the bottom line is that homes are more affordable now than at any time in recent memory, and buyers are seizing this opportunity. We expect to see increasing numbers of potential buyers entering the market as the broader economy continues to recover and household formation picks up further."

Maybe that's why U.S. consumers appear more upbeat and relaxed heading into the holidays. One big worry -- the value of their homes -- appears to be slowly, but surely, fading away.