U.S. home prices are unlikely to recover until at least 2010, one of the nation's top housing economists said Thursday, adding that homebuilding...
WASHINGTON — U.S. home prices are unlikely to recover until at least 2010, one of the nation’s top housing economists said Thursday, adding that homebuilding this year is expected to post its worst year in five decades.
Speaking to the National Economists Club, Frank Nothaft, the chief economist for government-sponsored mortgage buyer Freddie Mac, painted a grim picture.
Through the final three months of 2007, he said, sales of existing homes fell 29 percent from the same period two years earlier.
Forty-six states had falling prices in the fourth quarter, and prices nationwide were down 9.3 percent.
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In the Pacific region, which saw the steepest drop, prices fell an average 17.2 percent.
“I don’t think we’re going to see any improvement in the national house-price matrix until 2010,” said Nothaft.
He projected a 16 percent drop in mortgage originations this year for new home loans and refinancing.
He expects foreclosures, which rose by about 1.5 million in 2007, to rise further.
If there was any good news, it came from a bit of really bad news. The economist expects new single-family-home starts this year will be the lowest in 50 years.
What’s good about that? The plunge means fewer homes will come onto the market, helping reduce the supply of unsold new and existing homes.
By late this year or early next year, life should be returning to the national housing market, but prices won’t see significant recovery until 2010, Nothaft said.