Not Risk-Free

"If we've learned anything from this mess, it's that housing is not a risk-free investment," said Michelle Meyer, a senior economist at Bank of America Merrill Lynch Global Research in New York. "Everyone knows someone underwater in their mortgage or struggling to sell a home."

About 11 million U.S. homes were worth less than their mortgages at the end of 2010, according to CoreLogic Inc., a Santa Ana, Calif.-based real estate information company. An additional 2.4 million borrowers had less than 5% equity, meaning they'll be underwater with even slight price declines, according to the March 8 report. The two categories add up to 28% of residences with mortgages.

Future Plans

The share of Americans who said they plan to purchase a home in the next six months tumbled 23% in March, according to the Conference Board research firm in New York. The National Association of Realtors probably will say tomorrow that existing-home sales were at a 5 million annual rate in March, up 2.5% after a 9.6% plunge in February, according to the median estimate of 74 economists surveyed by Bloomberg.

Work began on 549,000 houses at an annual pace in March, up 7.2% from the prior month, figures from the Commerce Department showed today in Washington. The gain failed to make up for ground lost in February, when starts fell to the lowest level in almost two years.

The drop in homebuyer confidence may be temporary. Home sales probably will rise 4.1% to 5.1 million in 2011, with the biggest increases in the second half of the year, the Mortgage Bankers Association said in an April 14 report. In 2012, sales may climb 5.9% to 5.4 million, the highest pace since 2007, the Washington-based trade group estimated.

A rebound in home sales depends on the availability of jobs, the mortgage association said. The unemployment rate probably will decline every quarter of this year and next, falling to 7.9% by 2012's end, the trade group said. It was 8.8% last month, the lowest in two years.

Improving Employment

"We expect that purchase activity will pick up slowly as the improvement in the job market eventually leads to greater willingness to buy," the mortgage bankers group said.