Home Listings Decline
In 18 Metro Areas

The number of homes for sale in 18 major metro areas declined in November, marking the second monthly decrease in a row.

The decline is roughly in line with normal seasonal trends, and the supply of houses and condominiums for sale remains at unusually high levels in most of the country. Moreover, some economists expect inventories to bloat again early next year as more foreclosed homes hit the market and tight credit deters buyers. Still, the modest decline over the past two months is a positive sign for a housing market suffering from a glut of properties for sale.

Total listings of homes in the 18 metro areas at the end of November were down 2.5% from a month earlier, according to figures compiled by ZipRealty Inc., a real-estate brokerage firm in Emeryville, Calif. The data cover all listings of single-family homes, condos and town houses on multiple-listing services in those areas, where Zip operates.

The biggest declines were in the metro areas of Boston (down 8.2%) and San Francisco (6.4%). Inventory grew 2.8% in the Miami-Fort Lauderdale area, where there is an immense glut of condos, and was little changed in the metro areas of Phoenix, Orlando, Tampa and Los Angeles.

Nationwide, the number of detached single-family homes on the market in October was enough to last 10½ months at the current sales rate, according to the National Association of Realtors. That's more than double the level of two years ago and the highest since 1985.

"Inventories of unsold homes will rise substantially further in coming quarters" as foreclosures increase and tighter lending standards take more potential buyers out of the market, writes Mark Zandi, chief economist of Moody's Economy.com, a research firm in West Chester, Pa., in a new report.

On average, U.S. house prices will decline about 13% by the second quarter of 2009 from their 2006 peak, Mr. Zandi says. But the declines will be much larger in many parts of Florida, California, Arizona and Nevada as well as in the metro areas of Washington, D.C., and Detroit, he says.

That forecast assumes that the economy doesn't fall into a recession. But Mr. Zandi and other economists see a growing risk of recession next year. In that case, he says in an interview, the average price decline is likely to be around 25%.

Mr. Zandi describes the current housing slump as the worst since the Depression and says rising sales and production won't return to their normal, rising trends until "well into the next decade." But he adds that the pervasive gloom does signal a needed shift in psychology, convincing more sellers they will need to slash prices enough to entice buyers. "It's capitulation," he says.

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