US Median Home Price to Drop

Projected 1-2% decline for 2007 would be the first since 1950
By Polly Davis Doig,  Newser Staff
Posted Aug 26, 2007 3:08 PM CDT
Landscape workers work in front of new homes, Wednesday, July 25, 2007 in Columbus, Ohio. Sales of new homes fell in June by the largest amount in five months as the housing industry continued to struggle...   (Associated Press)
camera-icon View 1 more image

(Newser) – The median cost of an American home, now $220,000, is expected to drop this year for the first time since tracking began in 1950, reports the New York Times. The decline will be modest—1 to 2%—but could last into 2008 and 2009, meaning that, adjusting for inflation, homes aren't likely to return to their 2007 value for more than a decade.

The decline isn't expected to be steep enough to erase the increases of the last decade, but it does give the lie to the long-held belief that a national housing bust would never happen. Especially affected will be Americans who are overextended on their mortgages or have borrowed against their home equity. One think-tank director said there are many who bought “homes at hugely inflated prices who are going to take a hit.”