Is the Worst Over? Analysts Have Mixed Views

Some analysts reacting to the news that home sales rose a healthy 3.1 percent in July compared to June say the increase predicts further improvement. Others are more pessimistic.

"We are not yet ready to call the current levels a bottom but clearly most of the declines are behind us," says Adam York, a Wachovia Corp. economist.

"The good news is the trough is behind us," says Harm Bandholz, a New York-based economist with UniCredit, but Bandholz warns that tighter lending standards and rising foreclosures will continue to put pressure on housing prices.

Real estate consultant John Burns, who advises large builders and investment firms, says he thinks supply and demand will remain out of whack until there is a 46 percent decline in the inventory of homes on the resale market.

Burns, who is president of John Burns Real Estate Consulting, estimates that by 2010 the most stable markets will reach equilibrium and by 2011, the national market will move into better balance. Overall, he believes that it will take until 2014 for it to be business as usual.

Sources: The Wall Street Journal, Kelly Evans (08/26/2008) and Business Week, Amy Feldman (08/18/2008)