NAR forecast “way too optimistic”

From Globe and Mail:

U.S. house prices could drop another 10%

The U.S. housing slowdown is more severe than is being suggested and prices could fall another 10 per cent from current levels, according to National Bank Financial.
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Stéfane Marion, an economist at National Bank, disagrees with the NAR’s statement that the faltering U.S. housing market has hit a trough and prices will start climbing again. “In our opinion, this forecast is way too optimistic.”

The inventory of unsold U.S. homes climbed 1.5 per cent in August to its highest level since April, 1993. That surge, Mr. Marion said, has changed the dynamic of the housing market, but houses are still too expensive for many people.

“There is currently more than 3.3 million existing single-family homes and close to 600,000 existing condos available for sale in the U.S.,” he said. “Even at the current reduced price of around $225,000, it is important to keep in mind that the median single family home is still selling at 3.7 times median-family income.”

That is well above the historical average of 2.8 times family income, he said, meaning that the drop in prices have yet to improve affordability.

“We continue to think that the current supply-demand imbalance in U.S. housing will necessitate further downward price adjustments,” Mr. Marion said.

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