Home Prices to Fall 10% in 2011, Says S&P


Housingwire.com reports a somewhat alarming forecast from Standard & Poor's, suggesting that home prices still have a significant way to fall. Regardless of low mortgage rates, lack of demand for homes is weighing heavily on values.

Standard & Poor's analysts believe home prices will drop between 7 percent and 10 percent through 2011, erasing any improvements prices have recently made.

Home sales, which plummeted after the homebuyer tax credit expired in April have continued to lag. Pending home sales, which preclude existing home sale data,dipped 1.8 percent in Septemberbefore the market goes into a winter many expect to be bleaker than usual. With this lack of demand, inventories should grow, according to S&P, while prices drop.

"Low mortgage rates will likely continue to encourage refinancing, but their influence on home buying activities has been limited due to the weak housing market and a lack of demand," S&P credit analyst Erkan Erturk said.

See the end of this post for a larger version of the above chart and the rest of the story.