Homeowner equity and household wealth are important consumer spending benchmarks.

The Outlook: American homeowners are finally digging out of the hole created by the housing crisis. But their housing wealth is playing a much smaller role in the overall economy than it did before the downturn.

Wall Street Journal staffer Joe Light explores reasons housing's return from its dark depths hasn't provided the broad economic jolt that a housing recovery tends to do following a recession. Light checks in with economists, but his focus on homeowner equity and household wealth--as important a driver as those two areas are--cloud another issue, which is that new construction has had its proverbial hands tied, mostly due to the post Dodd-Frank, post Recession lending environment. More new home building would create a broader economic multiplier effect, driving consumer spending, improving profits, and creating jobs, which would then cause more demand for more existing homes, etc.

Light taps into the perspective of Moody's Mark Zandi for an outlook on what's next:

“We’re at an inflection point,” Mr. Zandi said. “Since the crash, it’s all been about repairing homeowners’ equity but now that house prices are returning to prerecession levels, we will see homeowners’ equity driving consumer spending, home improvements and economic activity.”

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