Rome wasn’t built in a day; when bubbles burst it takes time before they hit bottom, and even longer to climb back up. 

Sometimes forces can build which you would expect to stop the rot, yet falls can continue.  This is because there are multiple forces at work.  It takes time before new forces make an impact.

Yesterday, news broke that US sales of US pending homes jumped 6.3 per cent in April.    

The trouble is, inventory levels are so high, that it will take time, and for as long as this inventory makes it a buyers’ market, prices will fall.

Capital Economics said: “We suspect that the bottom for housing sales and construction may be closer than some people seem to think. House prices will continue to fall for at least another year or two given the excess inventory of unsold homes on the market. But sales have already been falling for a couple of years now and should have fully adjusted to the complete collapse in all non-conforming mortgage lending.”

Yesterday, the top man at the US Fed, Ben Bernanke, spoke out too.  He said, “Recent incoming data, taken as a whole, have affected the outlook for economic activity and employment only modestly.” Encouragingly, he added, “The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.”