The U.S. housing market is set for a fresh slump as the sputtering economy leads a growing number of once creditworthy borrowers to start defaulting on their mortgages.
"Before, a lot of it was just people who shouldn't have owned homes in the first place," said Joshua Shapiro, chief U.S. economist with MFR Inc. in New York. "Now we're going to start seeing a lot of people who get hit by hard times and can't afford to stay in their homes."
One of the ugliest statistics is that one in six U.S. homeowners owe more on a mortgage than the entire value of the home, according to Moody's Economy.com. The 16% of homeowners currently "under water" is up from about 6% in 2007 and 4% in 2006.