Housing analysts expect home price declines through 2011
Data firm Radar Logic and consultant Capital Economics said Tuesday that they expect home prices to decline further this year. Their analysis comes in the wake of Tuesday's The S&P/Case-Shiller composite home price index, which fell 1.6% from a year ago and 1% month-over-month. Prices on homes with mortgages backed by the federal government were unchanged during the same time period, according to the Federal Housing Finance Administration. "Notwithstanding the deceleration in the rate of home prices, we believe that home prices will continue to weaken on a month-over-month basis until spring, and a year-over-year basis through the end of 2011," the Radar Logic said. Radar Logic made a similar assessment when it released its RPX composite price index last week, which showed a 0.3% increase in home prices from October to November. Research firm Capital Economics also forecasts a price drop. The firm predicts a 5% drop by the end of 2011. "That will send more homeowners into negative equity and constrain consumption growth," Capital Economics said. Radar Logic said home prices will not recover on a yearly comparative basis until the market supply of homes shrinks; however, it does see prices moderately improving as the homebuying season picks up in March and April. Prices "will remain below levels at the same time of year during 2010," Radar Logic said. "If home prices improve due to a seasonal uptick in demand in March or April, the improvement likely will be reflected in RPX prices published in May or June." Write to Christine Ricciardi. Follow her on Twitter @HWnewbieCR.