Economists See Slower Housing Recovery

The recovery of housing prices will take at least four more years, according to a monthly survey of 110 leading economists and real estate experts, significantly longer than previously estimated.

Housing prices will rise only 7.2 percent by 2014 and the aggregate value of U.S. single-family homes four years from now will be roughly $1 trillion less than the economists projected in May, said Terry Loeb of MacroMarkets, the firm conducting the survey, which is based upon the projected path of the S&P/Case-Shiller U.S. National Home Price Index over the coming five years.

“For the first time, in this month’s survey, our panelists provided their expectations through 2015. Less than 3% of the panel expects negative change in 2015, and at +3.7 percent, the average of the forecasts for that year is slightly higher than the average annual rate of national home price appreciation that prevailed in the decade prior to the historic bubble. Yet, at +7.2%, the average projection of cumulative home price performance through 2014 reached its lowest point since survey inception for the second consecutive month,” said Robert Shiller, MacroMarkets co-founder and chief economist.

“The survey data we collected this year have consistently pointed to price stability in the intermediate- to long-term, which is reassuring in light of the volatility in actual home prices we have witnessed during the past few years. However, most experts foresee a longer road to recovery, and materially lower price performance in the coming years than they did just a few months ago,” said Terry Loebs, MacroMarkets managing director.

Since the third quarter of 2006, near the height of the housing boom, prices have fallen 28 percent by the third quarter of this year, according to the S&P/ Case-Shiller US National Price Index. The index rose 14.2 percent from the first quarter of 2009 until the second quarter of 2010, when the housing tax credits were in effect.

The latest MacroMarkets Home Price Expectations Survey was conducted during the period December 1st through December 15th.