A very good example of this is the evidence that individuals failed to purchase domestic equities until January 2013, as buying stocks took a backseat to making ends meet. As it relates to housing, the stunning drop in home prices in 2007-2010 will probably continue to be associated with a more conservative view toward home ownership and with a greater desire to rent. This helps to explain the continued lackluster single-family home market. We can see this phenomenon demonstrated in the continuing dominance of multifamily starts relative to single-family starts throughout 2012. It will be interesting to see how the enormous supply of apartments will impact rents and home prices in the coming year.
Source: Mark Hanson
In summary, while a real estate recovery is under way, a full-blown housing recovery is probably a few years away. I can see several factors (fiscal drag and higher interest rates) negatively impacting the consumer and serving to cause unevenness or even a pothole in the current housing recovery. The housing market will not save the U.S. economy, and growing optimistic expectations for the residential real estate market are not likely to be met in 2013-2014. Even if I am understating the recovery in housing, construction activity represents a relatively small fraction (3%) of GDP, and, as such its aggregate impact on domestic economic growth is probably being overstated by many.