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Has the housing market hit bottom?

Signs advertising new homes in Las Vegas.

KAI RYSSDAL: We've been here before, I know. Trying to figure out whether a given economic report mean housing's going to turn around. Let's just call today another step in our mutual adventure.

The Commerce Department came out with new-home sales figures today. Although they were up in December, 2006 was a year the home-building business would rather forget. For the year, new-home sales were down more than 17 percent. That's the biggest drop since 1989.

Edward Leamer directs the Anderson UCLA economic forecast.

EDWARD LEAMER: Well, I don't see any evidence that we've hit bottom. I expect we will hit bottom sometime. But there won't be a recovery, we're gonna bounce along the bottom for some significant period of time.

Leamer points out it was warm last month — one reason sales jumped so sharply. But growing desperation from builders is another factor.

LEAMER: If sales are going up while prices are going up, that's a symptom of strength in the market. But if sales are going up when prices are going down, that's a symptom of builders desperate to move their inventory.

That's Edward Leamer of the Anderson UCLA economic forecast.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.

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