March 2008 existing home inventory data was released this week and for about nine months now we have seen inventories hover around a ten month supply, as shown by my updated chart below.
Without declining inventories (prompted by sellers reducing their prices to more reasonable levels) we will not see stabilization in housing prices or improved loan performance in the banking sector. So for anyone looking for housing market improvement anytime soon, it looks pretty bleak on a national level. After all, basic economics tells us that when supply far exceeds demand, prices fall.