Forecasters predict further housing market slump
Some experts contend that high borrowing rates and low supply signal ongoing decline.
from the June 18, 2007 edition
Page 2 of 3
The housing downturn is hammering a few states particularly hard. The toll is greatest where prices surged the most – California, Florida, Nevada – or where industrial jobs are disappearing, such as Michigan and Ohio.
If today's higher interest rates persist, the housing slump could endure in much of the nation.
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"The housing downturn is pretty much national," says Patrick Newport, an economist who tracks the housing sector for Global Insight in Lexington, Mass.
Cities in the Southeast (except Florida), Mountain states, and the Pacific Northwest have generally held up well over the past year. But nationwide, the median sale price of a previously owned home was down 0.8 percent in April from a year before, according to data tracked by the National Association of Realtors.
This median price will have to fall further to bring supply and demand into balance, predicts Mr. Newport. His current forecast calls for prices to come down 2.6 percent in the current calendar year and another 3.5 percent in 2008.
It's not unusual for housing slowdowns to unfold over several years, as home builders and sellers gradually adjust to changing conditions in the marketplace.
An eventual recovery in housing hinges on homes becoming more affordable for buyers. If interest rates keep rising, "that would be really bad," Newport says.
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