U.S. Home Prices Face Three-Year Drop as Supply Gains
The slide in U.S. home prices may have another three years to go as sellers add as many as 12 million more properties to the market. Shadow inventory is preventing prices from bottoming after a 28 percent plunge from 2006.
The slide in U.S. home prices may have another three years to go as sellers add as many as 12 million more properties to the market. Shadow inventory -- the supply of homes in default or foreclosure that may be offered for sale -- is preventing prices from bottoming after a 28 percent plunge from 2006, according to analysts from Moody’s Analytics Inc., Fannie Mae, Morgan Stanley and Barclays Plc.
Sales of new and existing homes fell to the lowest levels on record in July as a federal tax credit for buyers expired and U.S. unemployment remained near a 26-year high. The median price of a previously owned home in the month was $182,600, about the level it was in 2003, the National Association of Realtors said.
There were 4 million homes listed with brokers for sale as of July. It would take a record 12.5 months for those properties to be sold at that month’s sales pace, according to the Chicago- based Realtors group. About 2 million houses will be seized by lenders by the end of next year, according to Mark Zandi, chief economist of Moody’s Analytics in West Chester, Pennsylvania. He estimates prices will drop 5 percent by 2013.
CoreLogic Inc., a Santa Ana, California-based real estate and financial information company, reported in its housing index the biggest declines in Idaho, Alabama and Utah. Maine, South Dakota and California had the largest gains. Nevada has the highest percentage of homes with mortgages more than the properties are worth, while New York state has the lowest.