Investment and Vacation Real Estate - Orlando, Florida

A new-found stability will be a far cry from recovery, however as record foreclosures, a sizable pool of bank-owned property, steep unemployment and wage cuts temper a rebound, economists said.

House prices will fall just 3 percent more before stabilizing, or 33 percent from the peak in mid-2006, based on the median forecast.

Thirteen economists, or about a third of the 41 polled, said the trough has already been reached while 27 of them said the bottom would be hit within a year. Just one said it would take up to two years.

"We believe that April of this year marked the trough for home prices, though the potential for a significant increase is limited," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia.

The closely watched Standard & Poor's/Case-Shiller 20 city-index will drop by 14 percent this year before reversing course and climbing 2 percent next year, based on the median forecast.

"A lack of credit availability, stressed consumer balance sheets and growing unemployment are not signs that suggest an environment of substantially rising home prices," said LeBas.

The poll found 29 of 39 economists said a housing price rebound is not needed to end to the economic slide.

"But it would be a prerequisite for a strong recovery, and that's not in the cards right now," said Adolfo Laurenti, deputy chief economist at Mesirow Financial in Chicago.

The weakest housing market since the Great Depression was pivotal in propelling the U.S. economy into recession. complete story

Source: Reuters - Lynn Adler