When demand is down, inventories of unsold houses go up. This creates a scenario where the supply will be higher than the demand.

When this happens, homes for sales suffer price drops and worse... back to back declines.

According to the latest data, some economists are warning that prices will keep declining through much of 2007. The market is a buyers' market and real estate players are brazing for more declines in prices.

With what is happening today, potential buyers hold off in the hope of further price declines. "There's no rush."

While the behavior of the buyers are like this, home sellers are taking houses off the market until they see a stronger demand. Some of them do not want to sell unless they will get the prices they want for the house while some experience huge losses. This is because they need to sell their home fast as they need the money, need to relocate or to avoid foreclosure.

Aside from the cut backs in prices, sellers give lots of incentives to buyers making the net proceeds from sale less.

Demand for homes is affected by the job creation in the community or nearby areas. If there are no jobs being created, most probably demand for houses will not improve. So job creation, together with population growth can help boost demand for houses.

Also, for people who are relocating to avoid congestion or rising housing and insurance costs, they delay the purchase of a new house as they have not yet sold their homes.

Now, it is spring, we should be expecting the demand to go up but with the high inventories of homes for sale, buyers can still have the luxury of time and still have plenty of choices.

Some sellers who don’t need to sell fast can just put off the property from the market. They can just offer the property for rent or lease as others are doing.