With the U.S. economy continuing to grow, and with the summer "moving season" approaching, many Americans are pondering: Is now a good time to buy a home?

Well, if you've found your dream house and concluded that you simply have to own it, economic statistics and housing market data are unlikely to sway you. However, if you haven't discovered your perfect house, and there are no other factors requiring you to move, you may want to bide your time a bit longer. The housing market continues to show signs of sluggishness, and unless job growth accelerates, prices are likely to remain weak to tepid in many major U.S. metropolitan areas.

And unless U.S. GDP growth revs up substantially, you'll probably get more value for your home-buying dollar in six or nine months than you would today.

Home Inventories Are Still Too High


Although the median sales price of a new home declined 8.9% in February to $202,100, and the median sales price of an existing home dropped 5.2% from a year ago to $156,100, the tell-tale stats for prospective home buyers to watch are the new and existing home inventory numbers. Right now, the pair suggest that prices will stay soft through the third quarter of 2011, and possibly for longer.

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In February, the new home inventory rose to a 9.6 month supply at the current sales pace, up from an 8.9 month supply in January, and existing home inventories rose to an 8.6 month supply at the current sales pace, up from a 7.5 month supply in January.

All other factors being equal, until home inventories drop below five-month levels, the oversupply most likely will continue to weigh on prices. While it's possible (but not likely) for prices to rise in a sustained way as inventories rise, the rule is: Rising inventories, downward pressure on prices; falling inventories, upward pressure on prices.

So in the months and quarters ahead, keep your eye not only on median home prices, but also on home inventories. If inventories are flat or continue to rise through summer, take it as a sign that a sustained housing recovery has not occurred, and that the dreaded double-dip housing recession may have started.

On the other hand, if inventories decline through summer, that will be at minimum a sign of stabilization in the housing sector, or at best, a sign that rising home prices are ahead.

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dcrand7

Are these writers oblivious of the Case -Shiller Index? This provides a long term baseline of where housing prices should be. We are still well above the average due to the unprecedented fiscal and monetary stimulus measures taken. Historically , we will probably overshoot the mark by ten percent, if so, prices could still go down another 30%.

May 04 2011 at 12:58 PM Report abuse +1 rate up rate down Reply
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April 13 2011 at 10:43 PM Report abuse +1 rate up rate down Reply
ump495

I GUESS I WAS ONE OF THE LUCKY ONES. MY WIFE AND I BOUGHT A HOUSE IN MARYLAND IN 1977. IT WAS A 3 BEDROOM SPLIT FOYER AND WE PAID 39.000 FOR IT. UNBELEIVABLE ISNT IT? WE PUT DOWN 10.00, SO OUR MORTGAGE WAS 29.000. WE LIVED IN IT WHILE I WORKED FOR THE GOVERNMENT AT FORT MEADE MARYLAND. WE SOLD IN DURING THE PEAK CRISES AREA FOR AN ASTRONIMICAL/UNBELEIVABLE PRICE OF 395.000. FOLKS I COULDNT NOT BELEIVE IT SOLD FOR THAT AND AM STILL PINCHING MYSELF TO THIS DAY. WE BOUGHT A MANUFACTURED HOME IN WEST VIRGINIA AND IT IS A BEAUTYFUL 3 BEDROOM, ALL THE UPGRADES, GORGEOUS HOUSE FOR 91,OOO. NO BANK FINANCING, NO MONEY OWED ONLY 700 A YEAR PROPERTY TAX AND ENERGY COST AROUND 700 A MONTH. WE ARE IN THE PANHANDLE OF WEST VIRGINIA ABOUT 20 MINUTES SOUTH OF HAGERSTOWN AND 1 HOUR AND 30 MINUTES FROM BALTIMORE. IT IS SO DIFFERENT HERE WITH FRIENDLY PEOPLE, LOW TAXES, VERY LITTLE TRAFFIC, VERY LITTLE CRIME AND WE COULDNT BE HAPPIER. I AM SURE THERE ARE MANY OTHERS IN OUR AGE GROUP THAT DID THEY SAME THING MORE OR LESS. AND I HOPE THEY ARE AS HAPPY AS WE WERE. OR MAYBE I SHOULD SAY LUCKY AS WE WERE. NOW WE SEE PEOPLE THAT BOUGHT HOUSES FOR 300,00 AND MORE AND THEIR PAYMENTS ARE 1800.00 TO 2300.00 A MONTH.
A COST THAT SENDS CHILLS DOWN MY SPINE. UNFORTUNATELY THESE PEOPLE ARE WORKING TO OWN A HOUSE AND HAVE NOTHING LEFT FOR SAVINGS, FUN, TRAVEL OR MUCH OF ANYTHING ELSE. ITS SUCH A SHAME THAT THESE PEOPLE WERE VICTIMS OF THE TIMES. A LOT OF PEOPLE IN THIS CATEGORY ARE WALKING AWAY AND RENTING AT A MUCH CHEAPER MONTHLY COST. HENCE, FLOODING THE MARKET MORE WITH VACANT HOMES.
THE HOUSING MARKET WILL NOT CHANGE FOR MANY YEARS. UNFORTUNATELY A LOT OF YOUNG PEOPLE WILL BE RENTING OF LIVING WITH THEIR PARENTS, SHARING ANY COST THEY MAY HAVE, DEPENDING ON THEIR CIRCUMSTANCES. SOME STATES LIKE NEVADA AND FLORIDA WILL TAKE YEARS TO FIX THEIR HOUSING DELIEMA. I AM NOT A MARKET ANALYSIS OR A FINANCIAL GURU BUT I AM SURE OUR HOUSING ECONOMY HAS SEEN ITS BETER DAYS AND ITS A SHAME THE GREED AND POLITICAL DECISIONS MADE WILL AFFECT OUR NEXT GENERATION FOR YEARS TO COME. THANKS FOR LISTENING. GOD BLESS.

April 12 2011 at 8:10 AM Report abuse +1 rate up rate down Reply
L R Adams

We continue to be preoccupied with housing. If you have a place to live and money to spend you need to sing the song* Don*t worry be happy*. Let the banks and lending institutions suck it up. They helped create this boondoggle and they should pay dearly for getting us to this point. Owning a house is not happiness*. Keeping a family together and living a life you can afford and having a little money left over for your family or yourself is happiness.
When they are standing at the grave site they are not going to say* he really had a nice house*. You want them to say *he really enjoyed life and took care of his family and was a good person.

April 11 2011 at 6:49 PM Report abuse rate up rate down Reply
news4pam

This article forgets to mention two major contributing factors to increasing home inventory: unemployment and lack of viable financing due to bank credit standards that are now tighter than a hangman's noose. As long as people still fear a loss of their stable income and while only a handful of people will qualify for traditional bank financing, according to banks' latest, ultra-crazy-conservative lending guidelines, the housing recovery simply will not happen.

The buying and selling of houses has always been a major driving force in our economy. Being able to finance houses is critical.

It is time for people to ignore banks and go back to private financing between buyers and sellers like they did when real estate interest rates were 22% in 1982. And by the way, if inflation comes roaring back in during the next year or two, that is where interest rates will go to again. Maybe not 22%, but certainly 8% to 10%. So, let's say you wait for "prices to drop" more like this article says to: but, then you are in a much higher interest rate market. You instantly lose all profit...it gets eaten up by the bank financing.

I used info from a new landing page called buyahousewithoutabank.com and found out my attorney knew about the concept this site is presenting but "forgot" to mention it because: a. he did not have personal experience with it; and b. my financial difficulties are not at the top of HIS priorities.

I am going to use the info to sell a rental house of mine at the price I want instead of letting it go to foreclosure or WAIT for the government or a bank to help me. I already have a potential buyer.

Don't let articles like this make you think that nothing is happening in real estate. The big money people are already out there buying commercial stuff and making land deals. My CPA is constantly analyzing deals for his cash rich investors now and says "everyone with money is getting back in...quietly."

Articles like this will freeze you with indecision and when the upturn comes, and it will, you will have missed out on historically low prices that are already almost at year 2000 levels.

April 11 2011 at 12:04 PM Report abuse -1 rate up rate down Reply
nobarrynmochell

Going forward in time we will see that the younger folks do not want to become slaves to a home like their parents. Stats show that marriages are down, numbers of children are down, need for houses headed down also. Years ago many left farms because they did not want to have such a hard life. Many today will not drive station wagons as their mothers did. Many going forward will choose to have a roof over their head and enjoy their time not slaving over a house. Also, many of them simply cannot afford high priced real estate even if they wanted it. Lifestyles change over time and so do homes. It is going to be a different landscape in the next decade or two. Homes can be toxic assets and the next generation likely will see homeownership in a different light.

April 11 2011 at 10:22 AM Report abuse -1 rate up rate down Reply
nobarrynmochell

A house is a roof over your head. It is an expense. How much are you willing to spend? Even if you pay cash for a house, the taxes, insurance,utilities and upkeep will continue to spiral upward. Basically a house never stops costing the owner money. Toxic Assets! Add up ALL EXPENSES associated with houses and see if still looks like an investment. Ponzi scheme is more like it. An investment should pay something not cost more. Buy the least amount of home you can live with and you will have more money in the long run. Two best days of a homeowner are the day he buys it and the day he sells it. Boats used to be that way but at least they are fun, not more work.

April 11 2011 at 9:45 AM Report abuse -1 rate up rate down Reply
kalelreg

Listen, your house, my house, his house is only worth what you can sell it for when you decide to SELL IT. You can't say "I bought it for $65,000 and sold it for
$whatever so I made/loss $????" because the only value is what it will sell for to
a buyer at the current time. A house is a shelter, not an investment.

April 11 2011 at 3:32 AM Report abuse -1 rate up rate down Reply
socioeconomist1

economy getting better ?..... didn't Obama recently run out of bandaid money to spend ?.... This website has got to be a division of the White House...

April 11 2011 at 2:21 AM Report abuse -1 rate up rate down Reply
chickenready

With no housing being built in the last 5 years, where is everyone living?

April 10 2011 at 12:53 PM Report abuse rate up rate down Reply