WASHINGTON (Reuters) - U.S. house prices are likely to continue to slide before bottoming out sometime in the middle of this year but will rise just over two percent in 2011 as a whole, according to economists polled by Reuters.
Asked when they see a bottom for U.S. house prices, 14 of 26 economists said they would trough in either the second or third quarter of 2011. Three saw the bottom coming as early as this quarter, while one did not see a bottom until the first three months of 2014.
“A pullback in prices following the expiration of the homebuyers tax credit was not a surprise. Ultimately, a recovery in the housing sector will depend critically on the job market, which should improve over time,” said Scott Brown at Raymond James.
The Standard & Poor’s/Case-Shiller composite index of 20 metropolitan areas, which has struggled since home-buyer tax credits expired earlier this year, declined 0.5 percent in November from October on a seasonally adjusted basis, the fifth straight monthly decline in home prices.
Asked how much further prices would fall before stabilizing, the median response of 24 economists who answered was another 3.3 percent drop from current levels. Two economists saw a further decline as sharp as 10 percent.
But medians showed prices, which economists say will have lost a third of their value from peak to trough, would rise 2.1 percent this year, up from the 1.0 percent prediction in a poll taken in November.
Economists saw house prices as fairly valued now. Asked to rate current prices on a scale of 1-10, with 10 being overvalued and 1 being undervalued, 27 of 32 respondents answered with a 4, 5 or 6. Just one responded with a 7 and one responded with a 2.
The average home sales price in the United States was $169,800 in the fourth quarter of 2010, according to the National Association of Realtors.
Sales of U.S. new homes raced to their highest level in eight months in December, but gains were driven by a surge in the West. Even with last month’s gain, new-home sales are down 75 percent from their peak of 1.283 million-unit pace in 2005.
“Housing is showing a ray of hope, but is still far from healed,” said Diane Swonk of Mesirow Financial. “The level of activity in the market, in particular new home sales, will take much longer to recover to reasonable levels.”
The poll was conducted over the past week and included a total of 33 economists.
(For data see)
Polling by Bangalore Polling Unit; Editing by Toby Chopra