The bursting of the housing bubble pushed the U.S. economy into recession, and continued weakness in housing has been a stubborn obstacle to a faster recovery. Recently, though, there are signs of improvement. A key measure of home affordability has gotten better—suggesting demand might start to pick up fairly soon—while the inventory of homes languishing on the market has shrunk.  

Affordability is measured by a monthly index produced by the National Association of Realtors. An index reading of 100 means a family with a median level of income has just enough income to qualify for a median-priced single-family home (assuming a 20 percent down payment). As the chart shows, affordability began declining in the first half of the 2000s, just as inventory started to soar.

As each day goes by it becomes more and more apparent that the seventeen countries comprising the European Union (EU), are in fact far too motley a crew to persist as a real union.

Clearly the weakest link is Greece, where recent elections failed to result in the formation of a government, and new elections could easily bring parties to power who favor withdrawal from the EU. Signs of stress are also visible in last week’s elections in France, which showed a strong vote against austerity, and in riots in Spain, where huge crowds took to the streets to protest that nation’s 25 percent unemployment rate. Austerity is unquestionably taking its toll.