Hopes for housing recovery go belly up

>>> now we turn to the economy and the thump of bad news today concerning just how bad the housing crisis is across this country. the index numbers out today show prices in 18 of the 20 cities they tracked fell in march. prices in 12 cities have hit their lowest level since the housing bubble burst. and it was supposed to get better, remember, not worse. nbc's john yang reports from one of those cities, chicago.

>> the unit's leasing at 1400 per month.

>> reporter: as a real estate broker aaron galvin sees lots of potential homeowners choosing to become renters instead.

>> the number of people who are able to buy, qualified to buy, and really would like to buy, but the uncertainty in the market is making it just too difficult to pull the trigger.

>> what color this?

>> reporter: he speaks from experience. when his daughter mia was born 20 months ago, he and his wife, amy, needed more room. but they couldn't sell their two-bedroom condo.

>> we decided to rent a three-bedroom, which afforded us the space to let mia run around, grow, and see what happens next.

>> yay.

>> reporter: overall, home prices have plunged 1/3 since their peak in july 2006 . home ownership has dropped sharply, too. according to the census bureau , it went from an all-time high of 69.2% in 2004 to 66.4%, the same rate it was in 1998 .

>> americans used to see financial stability in owning a home. today americans see financial risk .

>> reporter: housing prices are being pushed down by the glut of nearly 2 million foreclosed homes. at the current pace that backlog would take three years to sell off. analysts say a housing recovery depends on more jobs and economic growth.

>> many people are saying that spring 2011 was going to be the turning point. i think we've postponed that to spring 2012 . when hopefully we'll see a bottom.

>> good girl.

>> reporter: austin clark and her fiance from homeowners in nashville and lost money when they sold to move to atlanta. they've decided to rent and postponed buying a piece of the american dream .

>> that's something that we still aspire to, but i think that right now it's still an aspiration. it shouldn't be a reality.

>> reporter: retirees are being touched by this, too. many are choosing to sell their homes now rather than risk having their nest egg shrink even more. brian?

>> john yang in chicago for us tonight. john, thanks, as always.