Housing Prices Fall 14.1% in Sign of Continuing Slump
The problem boils down to supply and demand. As the home-buying season — that annual rite of spring and early summer — enters what is traditionally its busiest period, there are simply too many homes in many parts of the country, and too few people with the means to buy them. The situation is likely to get worse because a rising tide of foreclosures is flooding the market with even more homes, while a slack economy and tight mortgage market are reducing the pool of potential buyers.
Basic economics would suggest that lower prices should increase demand, but if buyers expect that prices will be lower still they will wait.