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Recession Spurs Home Price Decline


It wasn't too surprising that median prices for U.S. used homes dropped again in March—the seventh straight month of declines, the National Association of Realtors reported on Apr. 22.

The mounting glut of unsold homes might be a bigger concern for economists. The housing inventory in March increased 1%, to 4.06 million homes available for sale. That represented a 9.9-month supply at the current sales pace (up from 9.6 months in February), the report said. In March last year, before the credit crunch gripped the nation, the market had 7.5 months of inventory.

"Given both that the inventory overhang increased a bit and that recessionary job losses could lead to more foreclosures, the outlook is not good at all," said Anirvan Banerji, director of research for the Economic Cycle Research Institute. "It's likely that we'll see many more months of price declines."

The national median existing home price in March dropped 7.7% from a year earlier, to $200,700. In the West, which is strongly influenced by the slumping California market, median home prices fell 14.7% to $285,100. In the South the median price was $167,200, down 7.1% from a year ago. The median price in the Midwest fell 5.3%, to $152,600. In the Northeast, however, the median price was $284,300, up 4.6% from a year earlier.
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