Moody's/Economy.com is forecasting the housing market will hit bottom by the end of this year and house prices will remain flat in 2010.
"By the end of this unprecedented downturn, house prices will have declined by double digits peak to trough in nearly 62% of the nation's metro areas. In about 10% of metro areas, price declines will exceed 30%," according to the Moody's latest forecast.
Senior director for housing economics Celia Chen noted many of the imbalances in the housing market have corrected. The excess supply of unsold homes for sale has nearly stabilized and housing affordability has been restored in most markets.
The Obama administration is working on foreclosure mitigation, she said, which should keep foreclosures at 1.5 million in 2009, compared to 1.4 million in 2009. In addition, the housing market will benefit from the economic stimulus package in terms of adding jobs and boosting confidence.
"Policy makers are fully engaged and working hard to turn the economy around with the stimulus package," Chen said. At the same time, the Federal Reserve and Treasury Department are working to "pull down" mortgage rates.