The housing market recovery appears to have stalled before it even
really began. Home sales fell back in October and the renewed downward trend
in prices appears to have gathered pace. This is all happening at a time when
mortgage rates have remained close to record lows and housing has never
looked as undervalued against incomes as it does now. (See Chart below.) The
problem is that high unemployment, tight credit conditions and widespread
negative equity are preventing households from taking advantage of cheap
financing and favourable valuations.
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