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Tuesday Feb 10, 2009

US home prices to hit bottom at year-end: study

US home prices to hit bottom at year-end: study

WASHINGTON, Feb 9, 2009 (AFP) - The freefall in US housing prices that sparked a global economic crisis will ease by the end of 2009 but not before another leg down, resulting in a 36 percent slide, a study said Monday.

The report by Moody's Economy.com said home prices in the 381 US metropolitan areas have already dropped an average of 25 percent, and will slide a further 11 percent before stabilizing.

"Notwithstanding the intensifying economic gloom, the bottom of the housing downturn is within sight for the nation," said Mark Zandi, chief economist of Economy.com and an author of the report.

"Presuming we see strong action by policymakers to help support the economy and the housing market, prices will begin to recover by the end of this year."

The study predicts that by the time the market correction is complete, it will have led to double-digit declines in 62 percent of the US metropolitan areas.

The overall economy may take even more time to recover, the report said.

"Policymakers have not yet been able to break the downward spiral that has developed among the sinking housing market, job losses, frozen credit markets, and rising foreclosures," Zandi said.

But the report authors said that even if the recession ends late this year, as expected, the subsequent recovery looks to be lackluster. Growth is not expected to return to its pre-recession peak until late 2010, and the nation will not approach a full-employment jobless rate of 5.0 percent before President Barack Obama's term nears its conclusion in 2012.

bur-rl/vs - AFP

 
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