Last year’s correction in housing markets was sorely needed after five years of a booming expansion. But now there are signs that the correction is behind us and a year of stability lies ahead.
A quick recap: By the end of 2005, home prices were inflated, and property investors and speculators were ubiquitous, pushing to the sidelines home buyers who couldn’t afford lofty prices in boom regions. Some households also postponed buying because they believed prices would eventually drop. Then property speculators fled, dumping inventories. And home owners looking to sell remained stubbornly wedded to their listing prices.
The sky never fell in 2006. There were no bursting bubbles. But air came out of some over inflated balloons those markets that experienced frothy appreciation. Final 2006 figures show existing-home sales down 8.4 percent for the year, new-home sales down 17.3 percent, and housing starts down 12.9 percent.
This year will be better. Home sales appear to have bottomed out, reaching a cyclical low in September 2006. Since then, home sales have been inching up, albeit modestly. Inventories have stabilized, with the national months’ supply hovering around 7.3 months since July 2006.
For the entire Realtor.org article, click here.
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