Recent weak housing data has many experts convinced that the market will soon resume its downturn.
The Standard & Poor’s/Case-Shiller home price index of 20 cities rose just 0.3 percent in September, and a Federal Housing Financing Agency report showed that prices were unchanged that month.
That’s bad news for the economy, which has traditionally been pulled out of recession by a real-estate rebound.
“There is no clear, easy way out for housing,” John Silvia, chief economist at Wells Fargo, a bank whose own fortunes are closely tied to real estate, told The New York Times.
“Contrary to my hopes, housing prices and the housing market in general will weaken again.”
He predicts that prices will fall up to another 10 percent, and that could take half a percentage point from GDP growth.
Home-sales volume has risen recently, thanks largely to the $8,000 tax credit for first-time home buyers. But the market still faces a mountain of inventory – to the tune of seven months at the current sales rate.
“You can look down the street and have 10 houses to choose from,” Maureen Maitland of S&P told The Times.
Another bad omen: the portion of homeowners who are underwater surged to 23 percent in the third quarter, according to First American CoreLogic, a real estate research firm.
"(This) is an outstanding risk hanging over the mortgage market," Mark Fleming, chief economist of First American, told The Wall Street Journal.
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