Fortune: Housing not recovering

Fortune Magazine argues that housing isn't really recovering:

Americans purchased homes at a surprising clip in April, but don't let that fool you into thinking the housing market is back.

Although economists were expecting a month-over-month increase of 5.5%, the National Association of Realtors reported yesterday that sales of previously owned homes rose an unexpected 7.6%. That continued a yearlong rise in housing activity and marked the highest number of sales recorded since November of last year.

It also follows a drumbeat of similarly rosy economic news signaling the possibility that the United States may be on the economic mend. ...

But prospective home buyers, particularly those tempted to think of real estate as an investment again, should tread with caution. One critical obstacle to a housing recovery remains intact: supply. Until the number of empty homes starts to shrink, prices could still fall further.

Moreover, notes Joseph Foudy, a professor of economics and management at NYU's Stern School of Business, we're coming off of an artificial bump from the first time home buyer credit, which expired last month. ...

Many defaults have yet to be figured into the housing market because banks are sitting on them or they are being held back due to government programs like the federal Home Affordable Modification Program. ... At some point these homes will go on the market, further depressing prices.