The housing market weakened dramatically in November, with prices taking their deepest dive in at least 40 years as buyers refused to wade back in during a growing recession, according to data released yesterday.
The declines cited in government and industry reports were worse than analysts expected and deepened concerns that the housing downturn has entered a new phase, fired by a recession it helped create, economists said.
The market could fall harder as unemployment rises and government and industry efforts fail to stem foreclosures, they said. The economy shrank at a 0.5 percent annual pace in the third quarter, the biggest decrease since 2001, marking the beginning of what economists expect will be a much larger contraction for the last quarter.
The credit crisis and stock market volatility of the past two months helped fuel the slump, economists said. Even with a glut of housing stock and a free-fall in prices, buyers could not be coaxed back. And as prices fall, homeowners are likely to find themselves owing more than their home is worth, another factor in the housing downturn.
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