This Tuesday’s release of the latest S&P Case Schiller Housing Index data will provide some clues as to how much further prices have declined. Last month’s release, for January figures, indicated an annual decline of 10.7% in the 20-city composite. In fact, 19 of the 20 cities showed a drop, with Charlotte, NC registering a weak 1.8% annual gain. A Bloomberg forecast for this month’s release paints an even gloomier picture of a 12% decrease.

Data published last week by the Census Bureau indicated a worrying and continuing trend. Housing starts have slowed greatly, as homebuilders have curtailed their activities in the face of the slump. However, the rate of completed houses is still above those that are being sold. In short, the inventory of new homes is increasing. New home sales as of March were at an annual rate of 526,000 whereas completions were at an annual rate of 680,000. This implies a backlog, where new houses are lingering on the market, of 7.4 months. It appears that the decrease in prices, however dramatic, still has not been enough of a catalyst to reduce inventory. The median new home price of $227,600 in March is roughly 8% lower than it was last year.  The increasing inventory will continue to put downward pressure on home prices, both new and existing.