America’s home-buying season, when for-sale signs sprout like dandelions, is shaping up to be even worse than expected this year, with prices falling, sales slowing and few signs of a turnaround emerging.
Two reports released Tuesday captured the bleak picture. One showed that home prices in 20 major metropolitan areas fell 14.4 percent in March from a year earlier. The other showed sales of new homes, although up slightly in April, remained mired near their lowest levels since 1991.
While Wall Street is growing hopeful that the economy might dodge a recession, many economists warn that the pain in the housing market may last for several years. Even local markets like Seattle, which once seemed immune to the slump, are weakening. Prices nationwide might fall as much as another 10 percent before a turnaround takes hold, economists said.
The problem boils down to supply and demand. As the home-buying season — that annual rite of spring and early summer — enters what is traditionally its busiest period, there are simply too many homes in many parts of the country, and two few people with the means to buy them. The situation is likely to get worse because a rising tide of foreclosures is flooding the market with even more homes, while a slack economy and tight mortgage market are reducing the pool of potential buyers.
Today’s troubles can be traced to the excesses of the housing boom, said Ronald J. Peltier, the chief executive of Home Services of America, which owns real estate brokerage firms across the country.
“It’s like eating beyond your stomach’s capacity,” Mr. Peltier said in a recent interview. “We have huge indigestion.”
Sellers confront a sober reality: There are more than 4.5 million homes on the market nationwide. The way houses are selling, it would take nearly 11 months to clear the market. The last time so many homes were for sale was in the early 1980s, when the economy was in a deep recession and interest rates were two to four times as high as they are today.
For the most part, sales keep falling. Sales of existing single family homes tumbled 20 percent in the first four months of the year from the comparable period a year ago and are running at their lowest levels since 1998. Sales of new homes have fallen 42 percent over the last year. The Commerce Department reported Tuesday that sales increased 3.3 percent in April from March, when sales tumbled 11 percent, although the increase largely reflected a statistical revision to the earlier figures.
In Seattle, where housing had held up better than much of the rest of the country in the last two years, home sales have slowed sharply. Sales in King County, which includes Seattle, fell more than 33 percent in April from the same month a year earlier while the number of homes for sales is up 55 percent. Prices of single-family homes have fallen about 6.5 percent from their peak in July 2007 to February, according to the Standard & Poor’s Case-Shiller index.
As in other regions, the slowdown is hitting outlying areas first and hardest. Sales and prices are still robust in downtown Seattle and affluent suburbs like Bellevue because they are more desirable and closer to big employers like Microsoft, Starbucks and Boeing.
“We are still getting multiple offers on properties there,” Phil Rodocker, a Seattle-based real estate agent, said about the downtown area and Bellevue. But “as you move south, every 10 miles south you go, you see more and more short sales and repossessed houses.”
Builders are having trouble selling units in some newer condominium buildings. Mr. Rodocker got an e-mail message from one developer last week who a few months ago had quickly sold 251 units in a project under construction. Now, investors who had signed contracts to buy 40 of those units had reneged. The units in downtown Seattle are now being resold for as little as $225,950 for a one bedroom with one bathroom, prices that Mr. Rodocker said were so low as to be “ridiculous.”
Seeing the number of homes on the market rise and prices fall, buyers are becoming more picky and negotiating harder, he and other agents said. Basic economics would suggest that lower prices should increase demand, but if buyers expect that prices will be lower still they will wait.






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