LYNN NEARY, host:
This is WEEKEND EDITION from NPR News. I'm Lynn Neary.
Spring is the best season for selling homes, but after three years of dismal sales, most real estate agents are frustrated. They keep hoping this spring finally will thaw out the housing market and get sales moving again. But a couple of new reports on home sales suggest the market still has far more dead weeds than green shoots.
The National Association of Realtors said sales of existing homes dropped in March, down three percent from February. And a Commerce Department report on new homes showed those sales declined, too. They are down from 30 percent from last year.
The negative reports disappointed realtors and builders. NPR's senior business editor, Marilyn Geewax, has studied the data and is here to tell us what economists believe is happening in the housing market. Good to have you with us, Marilyn.
MARILYN GEEWAX: Thank you.
NEARY: So I thought that there was something of an uptick last month, wasn't there?
GEEWAX: Realtors did see an uptick in February, but then it didn't last. And by March we saw that home sales were falling again - down about seven percent compared with last year. Builders are waiting, sitting there with houses, sometimes ten months, more than that even. Of course, the longer they sit, the more money that the builders lose. And it's the same thing for existing home sales.
NEARY: So, do economists see any reason for optimism at all? Any belief that this housing depression is going to come to an end at any point?
GEEWAX: Well, if you pull out your magnifying glass and look very, very hard, economists see some positive signs. We're seeing a pretty good market, in a lot of ways. Home prices, the median now is 175,000. Last year it was 200,000. So, we've got good prices. Mortgages rates have been running around five percent -that's good. And now you throw in an $8,000 tax credit if you're a first-time buyer, that's a very good combination. So what we're seeing is first-time buyers - usually they're about a third of the market. This March we saw that they were a little over half.
NEARY: So, some bargains out there for these first-time buyers. What about in the area of foreclosures and that kind of thing?
GEEWAX: Well, one thing that people were encouraged to see is that in the foreclosure market, there are more people coming to look at these foreclosed houses. And, in fact, some people looking for bargains have started bidding wars. We've see out in California, Arizona, even here in Washington, D.C., realtors say they're starting to get multiple offers again. So, it's not affecting the market across the board, it tends to be concentrated on this lower end.
NEARY: And people with more expensive houses, then, are they just stuck in this market?
(Soundbite of laughter)
GEEWAX: For the most part.
NEARY: I'm sorry about that.
GEEWAX: Sorry. Economists say, look, the housing market has to heal from the bottom up. First, you've got to revive that lower end of the market and then the prices will start to work their way up. But for right now people who have more expensive homes, generally speaking, if you really need to sell your house, just cut the price.
But if you don't feel like cutting the price - and a lot of people are still really trying to avoid that - you know, then your alternative is to just keep the price where it's at and sit and wait.
NEARY: So, what's the expectation in terms of the housing market actually really bouncing back?
GEEWAX: This is a long, slow, tough process. Realtors and builders, economists, everybody agrees that this is not just something that you bounce right back from. Even if you start to sell off all the houses that appear to be on the market today, there are a lot more houses that are close to going into foreclosure.
And then think about, probably in your own life, you may know older people who wish they could move into assisted living or would like to retire to Florida or whatever. But they just don't feel like they can put their house on the market yet. As soon as we start to see the housing market come back, more inventory will flood in and it's going to take a long time to get this market back into balance.
NEARY: NPR senior business editor Marilyn Geewax. Thanks for being with us, Marilyn.
GEEWAX: You're welcome, Lynn.