Analysts at the Federal Reserve Bank of Dallas expect home prices to hit bottom by early 2012 as job growth expands in areas like Texas where comparably less overbuilding occurred in the decade leading up to the housing bust. The study’s authors — John Duca, David Luttrell and Anthony Murphy — admit the Fed’s earlier prediction of price stabilization by mid-2010 was “dashed by subsequent declines in home construction and prices.” At the same time, they believe the negative impact of housing supply overhang has been overstated because the housing market is a regional business, where states with expanding job growth, such as Texas, could see a bottom soon, as economy recovers and the pace of household formation rises. The Dallas Fed study showed most of the housing supply that could be deemed as “excessive” is limited to markets in Arizona, California, Florida and Nevada, which overbuilt in the 10 years leading up to the 2008 financial meltdown. The researchers point to a few of the same culprits cited in other studies about causes of the current housing slowdown: a market with high levels of foreclosure, falling home values and tighter underwriting guidelines. “Although the short-run outlook for the housing market is uncertain, it appears that new home construction and house prices at the national level will stabilize and start slowly recovering within the next year or so,” they said. While that’s only six months off and the economy just underwent the shock of Standard & Poor’s decision to downgrade the country’s credit rating, the Dallas Fed report is in line with a forecast from JPMorgan Chase (JPM), which recently predicted home prices would fall another 4% to 5%, before reaching a bottom in early 2012. Write to: Kerri Panchuk.