Wells Fargo’s chief economist, John Silvia, predicts that the housing market in the United States will likely weaken in the months to come.
In his most recent economic forecast, Silvia said, “There is no clear, easy way out for housing.” Silvia continued, “Contrary to my hopes, housing prices and the housing market in general will weaken again.”
Silvia’s forecast predicts that housing prices will decline by as much as 10%, which he expects will take off up to 0.5% of the nation’s economic output as it emerges from the recession.
S&P’s Case-Schiller home price index, a closely watched measure of the performance of housing markets in 20 metropolitan areas only rose by 0.3% during the month of September on a seasonally adjusted basis. During the month, prices fell in 9 major cities in the index, including Boston, New York, Seattle and Charlotte, N.C.
Another report from the Federal Housing Financing Agency indicated that changes in real estate prices were flat from August to September.
The Case-Schiller index, which represents about 45% of the US housing market, is a 3 month moving average. Since the indexes July and August statistics were relatively strong, the weak September report could indicate that a plunge in housing prices during the month. The index is down nearly 10% from the same time last year and about 29.1% lower than it was during its 2006 peak.
