* House prices fell 2 pct in Dec - HOX index
* Balance of households see further falls
* Analysts expect prices to stabilize ahead (Adds c.bank comment, detail, consumption figures)
STOCKHOLM, Jan 15 (Reuters) - The Swedish housing market extended its downturn in December amid souring sentiment among households already worried about falling prices, data showed on Monday.
Prices have dipped - with the capital Stockholm leading the way - over the last few months fuelling concerns the downturn will spill over into the wider economy, pulling down construction and leading households to hold onto their cash.
“There are signs that the market is already starting to stabilize, but it is too early to say that the danger has passed,” SEB economist Jens Magnusson said in a statement.
Home prices fell for the fourth month in a row, according to the Nasdaq OMX Valueguard-KTH Housing Index (HOX), dipping 2 percent in December.
The downturn in actual prices has, unsurprisingly, affected sentiment with banking group SEB’s Housing Price Indicator, dipping further into negative territory in January.
The indicator, showing the balance between households forecasting rising or falling prices over the coming year, fell to -13 from -5 in December.
But the gloom over the housing sector has yet to spill over into spending in other areas, with consumption rising 2.1 percent on an annual basis in November.
House prices and debt levels have risen rapidly in recent years, helped by low interest rates and generous tax deductions on mortgages and authorities have warned about threats to economic stability.
But the economy is strong, unemployment low and Swedes have lots of savings. Few analysts expect a crash despite a recent surge in supply.
Speaking last week, Riksbank Deputy Governor Cecilia Skingsley welcomed the fact the market was cooling off.
“I don’t think it would have been good if we had continued to have the kind of price rises we have seen in recent years of 10-15 percent a year,” she told reporters.
“Our view is that the increase in supply will probably lead in the short term to maybe some further price falls, but the strong economic development in Sweden and the rest of the world points to a stable price development ahead.” (Reporting by Simon Johnson, editing by Larry King)
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