2. Credit conditions: The availability of mortgage credit and the level of interest rates are also important ingredients to the health of housing. A further rise in interest rates could grind purchase and refinancing applications to a crawl (as housing demand has been pushed forward), even though mortgage rates are low by historic standards.

3. The propensity for home ownership: The desire to own vs. rent is cyclical. The pendulum has swung from the speculation of the last cycle, in which homes were daytraded, to a more conservative view of home ownership (likely to be with us for several more years).

These three categories are not setting up to provide steady growth in the U.S. housing market over the near term -- there are numerous question marks.

Economic Conditions

My baseline expectation is for (at best) 1.5% real GDP growth in 2013 -- this is below consensus expectations. And I believe there is further risk to the downside.

I remain particularly cautious on the consumer (and homebuyer), who, despite a slightly improving jobs market, faces numerous headwinds.

Credit Conditions

In the last week the yield on the 10-year U.S. note rose from 1.82% to 1.95%. The consensus appears to be that the 10-year will rise no higher in yield than 2.25%-2.50% in 2013-- based in part on continued deleveraging, slow growth and a friendly Fed (which will effectively repress long rates). Homebuyers have become accustomed to low mortgage rates, but I would caution that given housing's historic rate sensitivity, any rise in interest rates above consensus expectations could immediately provide a headwind to the U.S. housing market. Indeed, I expect refinancing and purchase applications to suffer in the near term if rates continue last week's rise.

The Propensity to Own a Home

It is different this time -- the average middle-class U.S. consumer is beaten up.

Faced with two large stock market drawdowns in the last decade, a flash crash, screwflation (in which income has not kept pace with the costs of necessities of life: insurance, education, food, etc.), the largest economic recession since the Great Depression, continued jobs insecurity and a 30% drop in home prices, consumer behavior has changed and is not likely to revert to the historical spending patterns exhibited in the last few cycles.

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