Economist Patrick Newport of HIS Global Insight said the housing market numbers are surely going to get better. However, he also said that the current numbers are so down getting better will not suffice in helping the still shaky economic recovery. And it seems that other analysts and economists agree with him.

The housing market has been a major driving force when the economy took a recent nosedive. It has also been big contributing factor in the economic growth in the late 2009 to early months of 2010. Nowadays, though, the housing market has taken such a bad turn that it no longer is significant enough to pull up (or maybe even down) the nation’s economy.

A recent report from the National Association of Realtors shows that though previously-owned homes improved by 7.6% in August, the number is still a disappointing result from what the analysts were expecting after the 27% slump in July. Even home prices gave a disappointing result: 0.5% decline for July. A bit of good news turned up with a report saying builders marked a 10.5% rise in new homes started for the month of August, a figure that’s higher than expected.

These numbers, when taken together, means the housing market has become a neutral force in the weak economic growth outlook. But it is not reason enough to leave it as it is. Though a dip in the housing market may not be enough to throw the country back into recession, it may still have an effect on where the economy is going.

The financial system is greatly affected by people’s perception of their own economic state; and home prices affect greatly this perception. Even home sales activity, aside from providing real estate broker income, also boosts furniture and other items buying.

Mike Larson, real estate analyst at Weiss Research, explains, “I don’t look at housing as a dramatic headwind for the economy, but I also don’t think it’s going to lead us out of the slump, either. Housing will be a sector that is stuck in the mud for some time while we work off excess inventory, but the impact on overall growth even if housing were to fall is a lot smaller than it was a few years ago.”

Historically, recession sees a slowdown on builder activity, only to see it do a U-turn when the economy picks up so as to meet demand; this is why housing has always been seen as a driver for economic growth. This time, though, the recession has been preceded by a flurry of house building activities and that excess inventory is still being worked off. Even when the economy sees a bit of light, the demand will not be enough to push for more building activities.