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Here's what's stopping the economy from fully recovering: Neil Irwin

Daily Ticker

The housing market is still recovering from a crisis that crushed sales and prices in 2007 and 2008, but the pace of that recovery is slowing and there are some signs it could be stalling out.

Existing home sales and new home sales were actually lower in March than in February -- and lower than a year ago. And although March housing starts were higher than February starts, permits fell 2.4% lower.

Neil Irwin, senior economic correspondent at The New York Times says the slowdown in housing is slowing the broader economy. "If housing just returned to its longer-term role in the economy in terms of residential investment and construction activity, then we'd have a much stronger growth track," Irwin tells The Daily Ticker in the video above."We'd have an extra million and a half jobs."

Related: Momentum may be changing in the housing market: Robert Shiller

Investment in residential property accounts for the smallest share of the economy than at any time since World War II, Irwin wrote in a recent column for the times "Upshot".

Home ownership has fallen to its lowest level in 19 years, according to the Census bureau. Only 64.8% of Americans, or about 74.4 million households, owned homes during the first quarter of this year, down from 65.2% in the fourth quarter of 2013.

Related: Exploding student loan debt threatens the housing recovery

A big reason for the decline in home ownership: "Young people are not forming households at the same rate they usually do," says Irwin.

That's an example of the economy holding back housing but the reverse is also true, says Irwin.
"You need a strong housing market to have a strong economy [and] you need a strong economy to have a strong housing market," says Irwin.

Related: Housing forecast: A not so sunny spring

And within the housing market, construction of multi-family homes is rising at a much faster rate than construction of single-family homes. Young people "who are striking out on their own are more likely to rent" apartments, explains Irwin.

On the positive side, construction jobs led the increase in all "goods-producing" jobs in the April jobs report released Friday. They rose by 32,000 for the month and are up 189,000 in the past year, with the bulk of the increase occurring in the past six months.

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