Economists: U.S. Home Prices Only Halfway Through Total Decline

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Economists: U.S. Home Prices Only Halfway Through Total Decline
June 18, 2008
Source:The San Jose Mercury News

Washington, D.C.--U.S. home prices are going to fall further this year, according to 10 major bank economists with the American Bankers Association.

While meeting with Federal Reserve officials this week in Washington, D.C., economists from banks including Wells Fargo Bank, JPMorgan Chase, Northern Trust, SunTrust Banks, PNC Financial Services Group and Huntington Bancorp said that the U.S. housing market is halfway through its overall price deterioration.

The reduction in consumer spending, higher fuel and food costs, stricter lending practices, high unemployment and general lack of optimism about the economy were all cited as factors, the San Jose Mercury News said.

"There are a number of head winds that consumers are dealing with," said Peter Hooper, chief economist at Deutsche Bank Securities and head of the American Bankers Association's economic advisory committee. "There's plenty for consumers to feel gloomy about."

The American Bankers Association predicted that the U.S. will undergo an "unprecedented" recession: Its first without a substantial quarterly gross domestic product drop.

The group also said U.S. home prices would fall 15 percent between now and late next year, which would cut consumer spending.