Why look at housing to gauge whether the U.S. is in a fragile state? Except for one instance, there has never been a recession at a time when the housing sector was strong. The following graph tells the tale of housing starts (you can see that in 2001 the housing market was strong and the recession was brief) and recessions:
A look at the 30-year conventional mortgage suggests that rates are at an all time low:
But borrowing is hard to do with commercial banks decreasing the amount of real estate loans that are
on their balance sheets (in the 2001 recession banks kept increasing the amount of real estate loans):
These graphs make the case for the double dip because without any demand for and supply of housing loans we are going to see a very fragile and painful recovery.