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The AP reported today that sales of existing homes and prices both fell in January. This was the sixth straight month the two criteria fell.
That was the slowest sales pace on record.

Median home prices were also down and many analysts predicted further price declines in the months ahead given high levels of unsold homes.

The National Association of Realtors said Monday that sales of single-family homes and condominiums dropped by 0.4 percent last month to a seasonally adjusted annual rate of 4.89 million units. That was the slowest sales pace, going back to 1999, and was seen as evidence that the steepest slump in housing in a quarter-century has yet to hit bottom.
The median price of a home sold in January slid to $201,100, a drop of 4.6 percent from a year ago. Particularly alarming, analysts said, was the fact that the inventory of unsold homes jumped to a 10.3 months' supply, meaning it would take that long to sell the 4.19 million homes on the market at the January sales pace.

That was just below a two-decade high of 10.5 months hit in October. During the peak of the housing boom in 2005, the supply of homes relative to sales stood at 4.5 months.

An economist was quoted with the obvious conclusion that, "Eventually, sellers will end their denial and realize that if they want to unload their homes, they will have to cut prices even more."

Analysts said one of the problems was a rising tide of mortgage foreclosures, which is pushing even more unsold homes back on the already glutted market.

Sales of existing homes fell by 12.7 percent in 2007, the biggest decline in 25 years, and are down 20 percent from their all-time high set in 2005, the final year of a five-year housing boom that saw sales and prices soar to record levels.

Over the past two years, housing has been in a steep downturn made worse by a severe credit crunch as financial institutions tightened their lending standards in reaction to their multibillion-dollar losses on mortgages that have gone into default.

As is usual, the herd opinion of those who will stay broke because they buy high and sell low was reflected in the statement of an economist who said, "With prices expected to continue dropping and banks leery to make loans, few prospective homeowners feel now is the time to buy."

That sentiment is the exact opposite of that held by savvy investors who realize that a down market is the best time to buy whether by "subject to", assignable lease/option, short sale, buy to hold for rentals, and other strategies.