No one can rest easy about the economy until U.S. housing markets right themselves. According to the accompanying charts, two of the major geographic regions in the U.S. are almost on the mend, while two others are still on the downslide.

Northeast Region
The Northeast region has had the smallest housing market decline and remains relatively the healthiest regional market in the country. Population change in the region is basically stable, but incomes are high and growing due to a foundation in knowledge-based industries. This strength is currently being eroded somewhat, however, by problems in the financial community, which is based in New York.

Midwest Region
Much of the Midwest has been losing population over the last couple of years. Weakness in traditional manufacturing sectors, particularly auto assembly and parts, has caused an exodus of workers to other regions. As a result, housing starts in the Midwest fell fast and hard throughout 2006 and the early part of 2007. They now appear to have stabilized in the latest three months, only slightly below the prior year’s level.

West Region
The West is a mix of immigrant population gains (California) and between-state shifts (away from high-cost California and towards the northwest and the Rocky Mountain States). The California market continues to suffer from hyper-inflated home prices. Seattle is seeing a high-tech resurgence and Las Vegas is welcoming residential investments by foreigners as a result of the U.S. dollar decline.

South Region
Housing starts in the South continue to weaken. Florida was one of the most overbuilt regions in the country at the peak of the housing boom. It is taking time to work off excess inventory. The lower U.S. dollar will help by attracting foreign homebuyers to once-in-a-lifetime bargains. Some other (mainly low-cost) regions in the south are atypical versus the rest of the country in maintaining economic growth. Texas, through its energy sector and immigrant arrivals, and North Carolina, through its new-technology industries, are the two primary examples.

Even in its reduced state, the housing market in the South is by far the largest regional housing market in the U.S. The South contains two states — Texas and Florida — that are among the four largest in the U.S. according to total population. (California and New York are the other two.) In the latest month, the South still accounted for more housing starts than the other three major geographic regions combined.

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