Economist Warns of Housing Market Decline

Recent federal reports have shown that existing home sales — the figure that economists say most closely influences pricing — are in a general decline. Analysts say that could be trouble, despite today's report that sales of new houses rebounded in August from a dip in July.

Those numbers were in the latest Commerce Department sales report.

But the larger trend is an ominous signal for the housing market — and the U.S. economy — according to professor William Wheaton, who teaches economics at the Massachusetts Institute of Technology.

Part of the issue, he says, is psychological.

"If people feel pesimestic, then they also don't spend," Wheaton says, comparing a dented property value to losing money in a retirement account. "A slow-down in consumer spending is likely if house prices take a significant dip."

Michele Norris talks with Wheaton about the new figures, and where the housing market may be headed.

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