Housing Prices Won't Recover Until 2013: Economists
U.S. home prices will stagnate through next year and only start recovering in 2013, according to economists polled by Reuters who also felt the stimulus options being floated will not do much to reinvigorate the market.
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The poll of 27 analysts taken Nov. 17-22 was more downbeat than a survey taken two months ago, which predicted small home prices rises next year of less than 1 percent on average.
With an excess of unsold homes holding prices down and more foreclosures expected, lawmakers and experts have floated various options for propping up the market until the economy improves and Americans start buying homes again.
But most of the economists polled were sharply critical of two of the main proposals: more purchases of mortgage-backed securities (MBS) by the U.S. Federal Reserve; and a reduction in loan principal for struggling homeowners.
"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." ...
Home prices as measured by the S&P/Case-Shiller home price index are expected to finish out this year down 3.3 percent compared with the 3.8 percent decline forecast in the September's poll.
But prices are seen slipping 0.3 percent next year compared to September's forecast for a 0.8 percent gain. Prices are expected to rise a meagre 1.5 percent in 2013.
Eighteen economists said they see prices bottoming in 2012, with 12 of those expecting it will happen in the first half of the year. Just one economist each said a bottom won't be found until 2013 and 2014, while 7 said it has already happened.
Expectations for existing home sales were unchanged at 4.95 million homes for the fourth quarter, while analysts modestly lowered their forecasts for the first quarter to an average annualized rate of 5.03 million homes from an earlier forecast of 5.10 million homes.