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Volume on the Housing Boom Is Going Down, Down, Down

NEW YORK ( TheStreet) -- The so-called U.S. housing recovery is taking a breather this spring -- not what homeowners, real estate agents, and economists wanted or expected heading into the prime home selling season.

According to the National Association of Realtor, February home sales fell by 0.4%, although they do stand at the highest levels since 2010.

Ironically, it's homeowners reluctant to plant that "for sale" sign on their front lawn that may be contributing to the slowdown. An absence of newly built homes isn't helping matters.

"Only new home construction can genuinely help relieve the inventory shortage, and housing starts need to rise at least 50% from current levels," says Lawrence Yun, the NAR chief economist. "Most local homebuilders are small businesses and simply don't have access to capital on Wall Street. Clearer regulatory rules, applied to construction loans for smaller community banks and credit unions, could bring many small-sized builders back into the market."

Other data tell a relatively similar story.

DataQuick, a San Diego-based real estate analytical company, says that home values might be rising, but that's a trend that may not last for long.

The firm recorded a rise in home prices across the U.S. in February, and a drop in foreclosures. But DataQuick also saw a decrease in home sales for the month.

"The increase in home price growth was positive in 34 of the 42 counties we highlight in every monthly PIR over the last month and quarter, revealing that the markets continue to rise toward a certain stabilization despite looming economic factors," says Gordon Crawford, vice president of analytics at DataQuick.

But U.S. home prices have a lot of catching up to do, and that's going to take some time.

"Recent home price growth rates, however, might be overcompensating for an overcorrecting decline in home prices during the economic downturn," Crawford says. "As a result, we expect the growth rates in these markets to slow to a level that is more in line with the rest of the country's home price growth."

The ratio of rising home prices really depends on where homeowners hang their hats.

DataQuick says that regions hardest hit by the Great Recession -- places such as Arizona, California, Florida and Nevada -- are experiencing the strongest rates of growth. All of those states saw home values rise by more than 10% last year, as opposed to 2.5% for the rest of the country.

The firm also says that the U.S. economy isn't growing fast enough to generate a legitimate U.S. housing boom, even though the employment data have been generally positive of late.

"Uncertainty factors lead to a difficult time valuing real estate; dampening the activity of both buyers and sellers," Crawford says. "Employment rose by 236,000 jobs in February, and although that is a favorable number we have seen this in previous years, where employment growth is positive only to decline in later months of the year."

All in all, that points to an unstable U.S. housing market going forward, DataQuick says. Sales and home values may be up, but economic conditions may slow growth rates in both areas this year and next.

That's a dash of cold water for the housing market, which was showing signs of heating up.

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