According to 33 economists polled by Reuters.U.S., house prices are likely to continue to fall before hitting bottom sometime in the middle of this year but will rise just over two percent in 2011 as a whole.
How Low Will We Go?
Among the economists, 24 of them anticipate a 3.3 percent drop from the current levels before stabilizing. While home prices will have lost a third of their value from peak to trough, they would however rise 2.1 percent this year, up from the 1.0 percent prediction in a poll taken in November.
Is There Hope?
Economists view current house prices as fairly valued. On a scale of 1-10, with 10 being overvalued and 1 being undervalued, 27 of 32 economists answered with a 4, 5 or 6. Just one responded with a 7 and one responded with a 2. According to the National Association of Realtors, the average home sales price in the United States was $169,800 in the fourth quarter of 2010. Sales of new homes in the U.S. rose to their highest level in eight months in December due to a surge in the West.
Diane Swonk of Mesirow Financial said, “Housing is showing a ray of hope, but is still far from healed. The level of activity in the market, in particular new home sales, will take much longer to recover to reasonable levels.”