NEW YORK (Commodity Online): US housing market is still in bad shape and US economy will have to improve significantly which is unlikely to happen, according to Michael Lombardi, lead contributor to Profit Confidential and financial expert.

According to recent data from the Mortgage Bankers Association (MBA), the total number of mortgage applications filed in the U.S. fell 12% for the week ending October 19 compared to the week earlier.

“Yes, there has been good housing market data flow from some parts, but overall the housing market is still beaten to the ground,” says Lombardi. He believes the U.S. economy in 2013 will be worse than people expect.

Lombardi notes that while home prices may have increased a little, the overall market is still in trouble.

In the article “Think There’s a Recovery in the Housing Market? Think Again…,” Lombardi reports that in September, the 30-year fixed mortgage rate in the U.S. fell to the record low of 3.47%, compared to 3.60% in August, according to Freddie Mac. (Source: National Association of Realtors.) But the growth in buyers for homes has not been from homeowners; it has come from investors.

“To have a healthy housing market, the people who actually buy the homes need to live in them,” reasons Lombardi. “However, record-low interest rates are not luring would-be homeowners back into the housing market.”

According to the Profit Confidential expert, in order for there to be a healthy recovery for the housing market and the U.S. economy in 2013, several areas will need to see an improvement, including an increase in mortgage lending, an increase in first-time homebuyers, an improvement in existing home sales, a decrease in distressed home sales, and mortgage payments made on time.

“A housing market recovery is crucial to an economic recovery for America, but it has to be a real recovery; not investors buying houses to rent them out to tenants,” Lombardi concludes, warning that both the housing market and the U.S. economy in 2013 are on the edge.