When Will Home Prices Stop Falling?

The answer is critical to millions of American homeowners who are watching their home equity melt away or are unable to move because falling values have sent potential buyers to the sidelines.

In the latest evidence that prices are still sliding, the National Association of Realtors reported Thursday that the median price of existing homes sold in June fell to $215,000, down 6.1 percent from a year ago. Sales fell 2.6 percent from the month before — far more than analysts had expected.

For starters, a lot depends on whether anything can be done to stop the ongoing wave of home foreclosures. As the inventory of bank-owned properties keeps rising, lenders have become eager sellers, hoping to get those properties off their books before prices fall further.

For the same reason, potential buyers are either waiting on the sidelines or making fire-sale bids. A surplus of motivated sellers and a dearth of interested buyers is pretty much the formula for further prices declines.

Congress this week finally passed a major housing bill after nearly a year of debate, but the measure is expected to help relatively few borrowers.