Analysts Say Home Sales and Prices Have Yet to Hit Bottom
Analysts for Capital Economics and Moody’s Investors Service say that both home sales and prices are still falling, and the U.S. housing market has not seen the bottom yet for both.
In its U.S. Housing Market Monthly Report, Capital Economics said that the number of pending home sales is down 32 percent following the expiration of the tax credit and that existing sales will follow this trend as soon as mortgage agreements are finalized on those tax credit home sales.
Moody’s has said that the odds are now one in four that a double-dip recession will occur, and if it does, housing prices may fall another 20 percent before stabilizing in 2012.
The Capital Economics report says that the housing market is currently experiencing excess housing inventory, and recorded a record high 11 percent homeowner and vacancy rate in the second quarter of 2010. It said that new home starts are also contributing to the excess housing supply.
Moody’s predicts that home sales and residential construction will be up slightly by the end of the year, while housing prices will depreciate “a bit more.”
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Greg Gilbert
Keith Maynard
