Home Sales Drive the Recovery

The recession is ending but recovery plows on: commercial credit can't be neglected.

It's been a long time coming, but thanks largely to strengthening housing markets, the country is pulling out of the recession. Existing-home sales rose 7.2 percent from June to July to post a seasonally adjusted annual rate of 5.24 million units. That is the highest monthly increase in at least 10 years. Perhaps even more telling is the fact that resales were 5 percent higher in July 2009 than they were a year earlier-making July the first month in nearly four years that we've seen a year-over-year increase.

To a certain extent, the housing picture is benefiting from other gains in the economy. Driven in part by improved economies around the world, U.S. exports are recovering, creating an increasing demand for U.S. businesses to replenish depleted inventories. The result is a virtuous cycle of growth.

But the star of housing sales has been the first-time home buyer tax credit. More than 1 million households have used the credit since it was enacted a year and a half ago. Given its widely recognized importance to housing, and thus to the entire U.S. economy, it's not surprising that the credit's reauthorization this year is so strongly supported in Congress and by the Obama administration.

But reauthorization alone isn't enough. It will take years for our economy to replace the 7 million jobs we've lost in this recession. To rebuild hiring, attention must turn to still hard-hit commercial real estate, which continues to face a debilitating credit crunch. It's good that the Federal Reserve has started focusing on the issue and we're hoping credit will flow increasingly into the market. But commercial real estate remains a wild card.

Yes, we're pulling out of the recession and better economic conditions lie ahead. Continuing the home buyer tax credit and relieving the commercial real estate credit crunch are what we need to bring those lost jobs back and keep the economy growing.