Housing Slump Prelude to Recession, Study Says

Octavion — Wed, 25 Jun 2008 14:29:00 GMT

The nation’s housing slump, crippled by falling prices and rising inventories of unsold homes, is the worst in a generation and still hasn’t run its full course, according to Harvard University’s annual housing report.

Harvard University’s Joint Center for Housing Studies painted a bleak picture of the current housing downturn, claiming that “the nation is in the throes of a housing downturn that is shaping up to be the worst in a generation.”

The study, the “State of the Nation's Housing 2008,” noted that housing starts, new home sales and existing home sales are at all-time lows since after World War II, while home price declines and foreclosure filings are the worst on record.

A recession followed six of the last seven housing downturns, said Nicolas P. Retsinas, director of Harvard University’s Joint Center for Housing Studies. The report concludes that the high levels of foreclosures will continue to exert downward pressure on housing prices, especially in low-income and minority communities, where subprime loans are heavily concentrated.

“The slump in housing markets has not yet run its full course,” Retsinas said in a news release. “With home prices falling in most metropolitan areas, homeowners are tightening their belts, remodeling less and staying on the sidelines.”

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Housing Slump Prelude to Recession, Study Says