Analysts at Morgan Stanley (MS) predict a 5% to 8% decline in home prices between the fourth quarter of 2013 and the first quarter of 2014.

In its latest report on the state of housing, they expect a prolonged bottom, with post-trough home prices growing mainly at the rate of the consumer price index.

Among nondistressed homes, prices will fall 5% to 10%, they said, notwithstanding historically high affordability metrics, driven mainly by continued constraints on mortgage credit availability.

A new report from Fannie Mae's economic research team projects home prices will reach bottom in 2013.

On the other hand, analysts at Morgan Stanley said they see a spiking demand for rental properties as increasing household formation creates a demand for shelter. But unlike in past cycles of economic recovery, they said, the strengthening demand for shelter cannot translate into a rise in homeownership precisely because of the constrained mortgage credit availability.

In May, Bank of America (BAC) said the homeownership rate will normalize to 63% and remain there, pulled down by the continued flow of foreclosures. The national homeownership rate stood at 65.4% in the first quarter, falling 1% from a year earlier and 0.6% from the previous quarter, according to the U.S. Census Bureau.

“We are bullish on rental housing,” analysts at Morgan Stanely said. “In our view, the incremental demand for shelter will be largely met by rental housing. The homeownership rate, which has sharply declined over the last few years, is unlikely to revert to the highs attained during the middle of the last decade.”