Northeast U.S., So Far Spared, Could Still Face Home Price Pain

WSJ For many U.S. homeowners, crisis hasn't meant urgency. Just as potential buyers have waited, many would-be sellers facing paper losses have not been forced to act. The standoff shouldn't be confused with stability. The housing freefall slowed in April. Prices dropped 18.1% year on year, according to S&P/Case-Shiller's index of 20 cities. They were lower in every city, but economists were encouraged by slightly more modest declines compared with March -- a possible sign the market is near a bottom. In some overbuilt cities, foreclosures have helped clear inventory while rapidly bringing prices back to reality. Phoenix and Las Vegas, for instance, have seen prices fall back nearly to 2000 levels. But markets like Boston and New York, where prices rose during the boom, albeit not as drastically as the Sun Belt, have slid much slower. Prices in Boston are still 48% above 2000 levels and New York's prices are 71% higher. Valuations in both cities are only about 20% off their peaks. Would-be sellers in the Northeast appear to be taking their time. There, the inventory of homes for sale has increased just 17% since the end of 2005, before the market bubble burst, according to the Census Bureau. In the West, meanwhile, inventories have risen 74% over the same time period. Transaction volumes tell a similar story. The National Association of Realtors says existing home sales in the Northeast fell 10% year on year in April, while they increased 17% in the West. Home prices in the less overbuilt Northeast are unlikely to correct as sharply as in some other markets. But further pain has likely been delayed, not avoided.