Here are a few housing articles from back in September. At the time, analysts were predicting flat to slight declines....
Then again, is seems like analysts always have a positive bias. I guess no one wants to predict bad news even though we acknowledge that there are regular business cycles. I guess we only see them in hindsight.
Rising inventory means that supply is greater than demand, which should cause prices to drop.
Rising Inventory of Unsold Homes Is Likely to Put Pressure on Prices
September 12, 2006
A continued rise in inventories of unsold homes in August is likely to put more downward pressure on home prices in parts of the U.S.
Inventories of homes in 18 large metropolitan areas across the country expanded by 4.7% in August from a month earlier, according to data compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville, Calif. The data are based on single-family homes and condos included in local multiple-listing services of homes for sale.
The biggest increases -- 16% in the Dallas area and 13% in Seattle -- came in markets that have been relatively strong recently. A sharp rise in inventories in those areas is likely to help restrain price increases. Other sizable increases came in Orlando, Fla. (8%), San Francisco (6.1%) and Miami (5.6%).
That is quite a trend-line on the chart.
Housing Slowdown Takes Its Toll
Economists Say Selling Prices May Stagnate, Or Decline, in 2007 as Cool Down Continues
September 8, 2006
Economists believe cooling in the housing market to extend into next year and many forecasters in the latest WSJ.com survey predict no change -- or an outright decline -- in home prices next year.
Twenty-five of the 48 economists who answered the survey's question about housing predicted no change or a decline in a closely watched gauge of nationwide home prices during 2007. The average prediction for next year was for an increase of 0.43%, lifted by five economists who forecast gains of 5% or more.
The average forecast would leave home-price appreciation well below the expected rate of inflation. Just 27% of the respondents forecast an increase in home prices of greater than 2.7%, which was the economists' average expectation of the year-to-year increase in the Labor Department's consumer-price index for May 2007.
The housing market doesn't move uniformly across the country; some regions or individual cities often have price changes decidedly above or below the national average. But the economists' predictions stand in stark contrast to the red-hot price appreciation seen over recent years.
Moreover, broad-based declines in home prices are unusual. The Office of Federal Housing Enterprise Oversight's home price index, upon which the economists based their predictions, has never posted an annual decline since its first calculation, in 1975. The last time that the index trailed inflation was in 1996, when home prices rose 2.6% compared to a 2.9% inflation rate.
The Ofheo numbers are closely watched among economists as a key gauge of the housing market, though some believe the index understates weakness in the market because it doesn't reflect concessions sometimes offered by home sellers, such as help with closing costs, which are effective price cuts.
