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Harvard study: Housing slump worst in 50 years

Growth in households to drive recovery

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The current housing slump is far from over and is shaping up to be the worst in 50 years, according to an annual report on the state of the nation's housing markets from the Joint Center for Housing Studies of Harvard University. Drastic production cuts and deep price discounts in 2005-2007 helped shrink the inventory of unsold new homes from a mid-2006 peak of more than 570,000 to less than 500,000 in early 2008. But the number of homes entering foreclosure nearly doubled to 1.3 million last year, and vacant homes for sale rose 46 percent over two years, to 2.12 million. "Until the number of vacant for-sale units on the market ... falls enough to bring vacancy rates back down, house prices will remain under pressure," the report said. "Working off the oversupply will require some combination of the following: housing starts fall even further; prices decline enough to bring out new bargain-seeking buyers; interest rates drop enough to improve affordability; ...