Housing Prices Fall 14.1% in Sign of Continuing Slump

By VIKAS BAJAJ
Published: May 28, 2008

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 nationally fell 14.1 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 too 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,â€