Home prices may fall an additional 1 to 1.5 percent in the third quarter but they will stabilize during the first half of 20011 and begin to rise during the balance of the year, according to the September forecast issued by the GSE’s economists.

The forecast could be jeopardized by a decline in the market beyond the anticipated drop in sales due to the “payback” of sales “borrowed” by the homebuyer tax credit as the result of buyers moving forward their purchasing plans to qualify for the credit that ended May 1.

“While we cannot rule out the risk that a more troublesome weakening of housing market fundamentals has recently started, home sales figures reported to date show no signs of a decline beyond that which one would expect given the pattern around the tax credit. Indeed pending home sales rebounded 5 percent in July, which would be most consistent with the second scenario of a partial payback and faster recovery,” the economists said.

“Nevertheless, while the decline in sales to date appear smaller than what would likely occur in a ‘double dip’ housing and macroeconomic downturn, we remain vigilant for any further signs of weakening,” they said in the September 2010 Economic Outlook.

The forecast total home sales will fall from an annualized rate of 5.22 million to 4.0 million in the third quarter and rise to 4.5 million in the fourth quarter, then continue to rise to 6.2 million by the end of next year.

Total conventional mortgages originated in 2010 will reach only $1,024 million this year after reaching $1,549 million last year, according to the Freddie forecast. Freddie also predicted that the 30-year fixed-rate mortgage rate would head back up through the rest of this year and the next, passing 5 percent in the last quarter of 2011. Freddie also forecasts that the unemployment rate would start to fall, reaching 8.6 percent by the end of next year as well.