U.S. home prices bottoming, but news ahead not sunny: Bank of America

Bank of America Merrill Lynch has dramatically revised its long-term forecast for U.S. home prices, the Huffington Post reported. “We… updated our home price model and believe that prices are bottoming now,” the authors of the study said of the bank’s most recent data, released today.

But the news was not all sunny. The immediate forecast looks better — in 2012 prices should rise 0.5 percent instead of the 3.5 percent drop that previous reports from the bank predicted. However, after bottoming out this year, prices will rise just 0.3 percent in 2013, according to their forecast, and in 2013 prices will rise only 0.3 percent, a revision from the prior prediction of 1.3 percent. In 2014, the news is just as dire: a gain of 2.8 percent slashed from the previous guess of 8.1 percent growth in prices.

At the beginning of the month, economist Robert Shiller made comments essentially in agreement with the BofA forecast.

“That’s going to be a frustrating slog, if true,” Huffington Post said. [HuffPo]