The inventory of existing homes for sale is also quite elevated – and it would be even higher if not for would-be sellers who have withheld or withdrawn their homes from the market amid poor selling conditions. We have also seen sharp drops in home prices.
When home prices were at their peak three years ago, most analysts agreed that housing valuations seemed to be substantially higher than warranted by fundamentals. However, home prices at the national level are now 18 percent off their peak, with some states, such as California and Florida, experiencing declines on the order of 40 percent.