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And the housing market may be finding its footing. A survey from the National Association of Homebuilders shows falling prices are making homes, quote, "more affordable" now than they've been in nearly two decades. NPR's Chris Arnold reports.
CHRIS ARNOLD: Nobody who owns a house likes to hear that home prices are falling. But those falling prices themselves are actually a powerful force when it comes to fixing the housing market. That's because cheaper homes get more people buying again. Mark Zandi is chief economist at Moody's Economy.com. He says that these latest affordability numbers are encouraging.
Mr. MARK ZANDI (Chief Economist, Moody's Economy.com): The bottom in the housing market is coming into view. I mean, home sales have stabilized from where they were at the end of last year. And that's because of the much improved affordability. You combine record-low mortgage rates with these very low house prices and housing becomes much more affordable. And people sense that and are now going out and looking at homes and some are even buying.
ARNOLD: And so, you know, it doesn't seem, like, we're seeing a real flood of buyers into the market. What's going on?
Mr. ZANDI: Well, there's still two big problems in the housing market. First is jobs. We're losing lots of them and unemployment is rising. And until the job market stabilizes will we see home sales really begin to pick up. And the other is psychology. People see prices falling and they don't want to catch that falling knife. They want to get the house at its lowest price. So they're still waiting. They sense and feel, probably rightfully so, that prices are going to move even lower, and affordability will move even higher.
ARNOLD: Zandi thinks house prices will keep falling at least through the rest of this year. A big factor there is the foreclosure mess. Literally millions of those homes keep getting dumped on the market at fire-sale prices. So Zandi doesn't see prices really stabilizing until the government and the industry manage to prevent more foreclosures.
Chris Arnold, NPR News.
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