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The national real estate picture is showing the result of the downturn that was to be expected. Sales are down and homeowners are lowering the price to soak up the excess inventory. There is a nationwide inventory of 3.92 million homes that experts are expecting to take 7.5 months to absorb.

The slowdown in sales was weighing on home prices, with the median price of an existing home sold in August dropping to $225,000, 1.7 percent below August 2005. It marked the first year-over-year price decline in more than 11 years. via Yahoo! News.

The housing slowdown from the torrid pace it has been on will affect the nationwide economy. Then we are in an interesting situation. Will the slowing economy get the Federal Reserve to lower interest rates. The 2 years of constant raising of interest rates has a big effect on the slowing of the real estate industry.

And if interest rates lower, and business activity keeps improving outside of the real estate world, will the increase in wages restart the housing market quickly? Also, will the Federal Reserve stand by and do nothing with interest rates as the national midterm elections are in 43 days? That has been their mode of operation with Greenspan, will it continue? And will they lower rates after the election?

This will be a very interesting time to watch if you like macro economics.

Related posts:

1. 30 Year Mortgage Hit 6.62 Percent
2. Existing home sales rise 2% in August, 2005
3. A Little More Good News - Home Sales In July Up Over Previous Month
4. New Home Sales Fall 11.3% from October
5. April 2007 Existing Home Sales Fall 2.6 Percent