A Lot of Homes for Sale

Many experts believe that a housing market recovery is just what's needed to revive the recession-mired economy. But it seems that little progress has been made towards treating the heart of the housing crisis, and until those issues are resolved, analysts say, recovery will remain a long way off.

At the end of November, 4.2 million existing homes were for sale in the U.S., the NAR says. That's an 11.2-month supply at the current sales pace. It matches April's high, the most since the early 1980s. The rate is well above the six-month supply the NAR considers healthy.

That's a lot of inventory to work through, and our expectation is, that will need to decline before we see stabilizing house prices.

Declining mortgage interest rates have spurred some buying, but a lot more refinancing. Rates began falling as the Federal Reserve launched an effort in late November to aid housing and rein in spreads on related debt and securities.

Some of the worst-affected areas are showing signs of life after extreme price drops.

Though worsening economic results could change things, the typically optimistic NAR forecasts the sales pace to pick up this spring and housing inventory to decrease significantly by year's end.

Repossessed homes make it tough to get an accurate reading on how big the glut of unsold homes really is. Homes taken back by lenders are called real estate owned, or REO. Many such homes never even make it onto the multiple listings service Realtors use to sell homes. So they aren't counted in the U.S. inventory of homes for sale; they're a shadow supply. As lenders liquidate REOs, they compete with other homes on the market, in effect bloating inventory.