Existing homes fell by 2% to an annualized rate of 4.93 million in March, down from 5.03 million in February according to the National Association of Realtors. This was slightly better than consensus, which was set at 4.92 million. Median prices fell 7.7%, and inventories rose again, to 9.9 months, up from 9.6 last month. A startling 18% of houses for sale have “negative equity.”
The consensus is now that housing will remain weak through most of 2009. If the downturn lasts as long as previous housing cycles, however, expect it to last at least until 2010.
“There still is an imbalance in the existing housing market that needs to be corrected through lower inventories and higher sales,” said Michelle Meyer, an economist at Lehman Brothers Holdings Inc. in New York, which correctly forecast the sales level. “The market will remain out of balance this year and most of next. As long as the housing market remains weak we think the economy will remain weak as well.”
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