Though savings rates are high and credit availability is improving, trouble on the home front will keep vehicle sales at bay.
“Housing prices are still falling by 3.9% across the country,” said Paul Taylor, chief economist of the National Automobile Dealers Association, during a panel discussion at the Conference of Automotive Remarketing. “That’s simply not helpful.”
In fact, housing-related problems have stymied economic recovery. The economy is on pace for 3% growth in gross domestic product this year, about half the normal rate that characterizes recovery from recession, Taylor said.
In the third quarter of 2010, housing prices took a double dip. They had already dropped ― more than 10% in some cases ― in the final quarter of 2009. In many cases, though, the price declines affected “normal” houses, not million-dollar homes, Taylor said.
“That affects the willingness of consumers to buy,” he said.
Real estate trouble will do little to improve the unemployment rate, too. “The housing market won’t contribute to huge employment gains,” he said.
“Though unemployment has come down to below 9%, until it’s in the 6% range, we won’t see 16 million to 17 million unit sales,” said Ira Silver, economist for the National Auto Auction Association.
Silver predicts 13.5 million new-vehicle sales this year, and 15 million units in 2012. But it will likely take until 2013 or 2014 for the housing market to turn around.
Until then, the economy will continue to recover slowly.
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