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 home building this year is likely 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 of today's housing market.
Through the final three months of 2007, he said, sales of existing homes were down 29 percent from the same period two years earlier. Forty-six states had falling home prices in the fourth quarter, and prices nationwide were down 9.3 percent. In the Pacific region, which saw the steepest drop, prices fell an average of 17.2 percent, followed by mountain states, whose home prices fell an average of 12.9 percent.
"I don't think we're going to see any improvement in the national house-price matrix until 2010," said Nothaft, a respected government economist who's followed the national housing market for more than two decades.
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 increase even more this year
If there was any good news in the stark snapshot of the housing crisis, it came from a bit of really bad news. The Freddie Mac economist thinks that new single-family home starts this year will be the lowest in 50 years, back when Dwight D. Eisenhower was president.
What's good about that? The plunge in new-home construction means that fewer homes will come onto the market in an environment with few buyers. A fall in home starts helps 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.
Across the nation, he said, most markets are seeing homes for sale sitting for longer periods. Miami leads all markets, with homes remaining on the market 65 days longer in September 2007 than they did in September 2005. Boston was close behind at 61 days more, followed by the Washington-Baltimore area at 40 additional days.
North Carolina was the exception. Homes in Raleigh were on the market four fewer days than they were in September 2005, and in Charlotte one day fewer than two years earlier.
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