Bank analyst Meredith Whitney has no doubt that a double dip in housing is on the way.
"Banks are actually accelerating their foreclosure programs, accelerating their short-sale programs,” Whitney told CNBC. “People who have been paying their mortgage now have to start paying rent."
The biggest reason for another drop in housing is that banks are more aggressively foreclosing on delinquent borrowers, Whitney says — and that will increase housing inventory and put downward pressure on home prices, ensuring that overall economic growth will be tepid at best.
Whitney says she’s never before seen consumers behave as they do now, especially when it comes to mortgages, which growing number of consumers are electing not to pay so they can pay their other bills and increase personal spending.
Whitney also says that states’ budget woes will drag down the national economy, “cutting jobs in a material way for the first time on record.”
Whitney also warns that financial policy unfriendly to the middle class will also harm the economy.
Meanwhile, recent housing data support Whitney's stance.
Housing starts fell to a 593,000 annual rate from a revised 659,000 pace in April that was lower than previously estimated, Bloomberg Business Week reports.
Building permits, a sign of future construction, unexpectedly declined to a one-year low, the report from the Commerce Department showed, and single-family home starts suffered the biggest drop since 1991.
Sales of previously owned homes fell unexpectedly in May as delays in processing mortgage applications hampered the closing of contracts benefiting from a popular homebuyer tax credit, an industry group said.
The National Association of Realtors said sales fell 2.2 percent month over month to an annual rate of 5.66 million units from an upwardly revised 5.79 million-unit pace in April.
Analysts polled by Reuters expected May sales to rise 5.5 percent to a 6.12 million-unit pace from the previously reported 5.77 million units in April. Sales were up 19.2 percent compared to May last year.
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