Housing Market Changing ?

We have all been curious as to where this housing market is headed. None of us has a crystal ball and opinions are varied. Here is a different point of view.

Goldman Sachs worries about housing
Here's an interesting piece of research from Goldman Sachs about the housing market.

Here are the highlights:

Surging Home Inventories Start to Push Down Prices

* The December existing home sales report suggests that US housing market conditions are deteriorating rapidly. Adjusting for normal seasonal variation, inventories of both single-family homes and condos appear to be surging.

* Presumably because of rising excess supply, median prices have begun to fall sharply. From October to December, we estimate that the seasonally adjusted median price of single family homes declined by the largest percentage in any two month period since 1986.

* Unless the market bounces back sharply in early 2006, we may need to revisit our view that US house prices are set for stagnation rather than outright declines. A pronounced decline could call into question our forecast that real GDP growth will not slow below trend until the fourth quarter of 2006, and might even imply that the FOMC will need to revert to monetary easing before the end of the year.