Economists, during an annual meeting of the National Association of Real Estate Editors, shared that continuing foreclosures and an "overhang" in housing inventory will likely prolong the housing slump for several more years.  Home values in many markets are still in decline, said Stan Humphries, chief economist for online real estate search and information company Zillow. And housing demand may not see a normal balance with new household formation and housing starts until 2013, said Doug Duncan, chief economist for secondary mortgage giant Fannie Mae.

The "overhang or shadow supply" of housing inventory has a lot to do with the drawn-out recovery for the housing market, he noted.  Zillow also forecasts a bottom in home prices during the third quarter. The "tremendous amount of shadow inventory," which Humphries defined as properties that are in foreclosure and not yet on the market or are seriously delinquent and not yet in foreclosure, is definitely a contributor to the stalled real estate recovery, he said. Negative equity, combined with high unemployment is the other key factor. The federal tax credit programs offered to first-time and existing homebuyers do not appear to have had a major impact in driving sales, he also said Humphries. Also, the tax credits appeared to just be "stealing demand" ahead in time, and July and August are the months to watch out for.