Housing slump is here to stay Falling home prices, lack of construction won't be reversed for a while, experts say. Star and news service report, Indianapolis Star 30 May 2007 New home construction in the U.S. may take until 2011 to return to last year's level, said David Seiders, chief economist for the National Association of Home Builders in Washington. Monthly construction starts would need to jump by 21 percent to reach Seiders' benchmark for full recovery, which is 1.85 million. There were 1.53 million in April, the Commerce Department said. At the height of the five-year housing boom in January 2006, construction began on 2.29 million homes. "We've fallen way below trend because we soared way above trend during boom times," said Seiders in an interview. "The upswing will be relatively slow, unlike earlier cycles." The inventory of unsold homes is the largest since the Chicago-based National Association of Realtors started counting them in 1999, and house prices have suffered the steepest drop since the Great Depression, according to the Realtors' group. The national rise in number of unsold homes isn't being seen in the Indianapolis metro area. In April, 20,632 homes were available for sale in Central Indiana, an inventory equivalent to 8.26 months' worth of homes for the area, according to Landrigan & Co., a real estate company. That compares with an inventory of 8.53 months at the end of March. In March 2006, the inventory of homes on the market would have taken 10.08 months to sell. However, defaults and foreclosures nationally may rise as about $650 billion of loans to subprime borrowers, those with poor or limited credit histories, reset at higher interest rates by 2009. "We're still being hit pretty hard by the subprime-related mortgage market problem," Seiders said. "One of the biggest unknowns right now is how serious the change on the mortgages side will be on home sales." Sales of new homes rose 16 percent in April, the highest increase since 1993, the Commerce Department said last week. The biggest gain in new-home sales in 14 years was made possible by home builders who cut prices more in April than in any month since 1970. The median new-home price fell 11 percent to $229,100 from $257,600 a year earlier, the reported showed. Declines in home prices in 20 U.S. metropolitan areas accelerated in the 12 months ended in March as the supply of homes exceeded demand, a private survey showed Tuesday. Home values dropped 1.4 percent from March 2006, after declining 0.8 percent in the year ended February, according to a report by S&P/Case-Shiller. Sales of previously owned U.S. homes fell in April to the lowest level in almost four years, the National Association of Realtors said last week. "I'll break out the champagne a year from now after the resetting of the mortgage rates and defaults come in less than what we're fearful about," said Susan Wachter, a real estate professor at the Wharton School at the University of Pennsylvania. "For now, for the sake of the wider U.S. economy, the home builders have to start clearing out their inventory." Atlanta-based Beazer Homes USA was offering houses in the first quarter at a development about 44 miles outside Phoenix for $136,990, down 36 percent from the year-earlier price of $215,490, said Samantha Morris, senior consultant in Houston-based Metrostudy's office in Mesa, Ariz. Builders "have written off any hope" of 2007 being a good year, said John Burns, president of John Burns Real Estate Consulting in Irvine, Calif. "When you start offering consumers a good deal, you start selling homes."