Analysts at Wall Street investment bank Morgan Stanley (MS) are adjusting their home price expectations downward amid continued turmoil in the mortgage industry. "We believe a lower level of mortgage credit availability is, and will, contribute to weakness in the housing market," analysts said in a note to clients. "Recent developments in issues such as GSE reform, Dodd-Frank securitization rules, and foreclosure settlement issues suggest a tighter and more expensive environment for mortgage credit." In October, the same Morgan Stanley analysts expected housing prices to continue to slide, reaching new depths in 2012. In December, the prediction stood at a 6% to 11% decline from third-quarter levels. The analysts now project another 6% to 11% drop from the fourth quarter. "This is lower than our previous projection of as the index declined nearly 4% from Q3 to Q4," they said. "This increases peak-to-trough decline projections by roughly 3%." The analysts said they could revise their estimates. Morgan Stanley will raise its estimates should prices for distressed and nondistressed properties meet sooner rather than later. However, the firm will lower estimates if liquidations increase housing supply, which would drag down market prices. One bright spot is in the multifamily space. New construction is at a stand still and demand is rising. Supply is limited and therefore rents are rising across the nation, the analysts said. Write to Jacob Gaffney. Follow him on Twitter @JacobGaffney.