Experts predict more U.S. home price declines

TRD MIAMI /
Nov.November 23, 2011 01:41 PM

Just two months ago, economists figured nationwide housing prices would begin rising next year. A new poll by Reuters shows that that confidence was fleeting, as the group of 27 analysts surveyed last week predicted prices would remain flat, and only begin to recover in 2013.

The economists Reuters spoke with expect 2011 to finish with housing prices down 3.3 percent (as measured by the S&P/Case-Shiller home price index), and foresee an additional 0.3 percent decline in 2012, marking the bottom of the market. In 2013 they expect prices to increase by 1.5 percent.

The current excessive inventory coupled with more foreclosures coming through the pipeline were the main reasons economists felt prices would stagnate. And most economists polled were skeptical of the two main solutions being offered by policymakers and experts — the Fed purchasing more mortgage-backed securities and a reduction in loan principal for struggling homeowners. The government has already purchased more than $2 trillion in long-term securities in order to help keep interest rates at their current, historic lows, though low rates have so far done little to spur a price recovery.

“We see little prospect that any policy action will meaningfully impact the housing outlook over the next year,” said Sam Bullard, senior economist at Wells Fargo. “Unfortunately, a sustained improvement in housing will not likely get underway until the mountain of foreclosures is cleared and the price discovery process plays out.”[Reuters via CNBC]


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