Economists: Price Declines Will Be Contained

The housing bust is over, but home prices will decline next year, reported most of the 49 economists surveyed by The Wall Street Journal in an online survey.

Economists' opinions varied widely on how much housing prices will change. Twenty economists predicted home prices would rise; 24 predicted a decline; and 8 predicted gains greater than 2.1 percent. Analyst Ethan S. Harris of Lehman Brothers says he expects price declines next year to be confined to "bubble" markets, such as those in Florida, California, and cities in Nevada and Arizona, where large numbers of investors have inflated prices. "There's no reason for prices to be falling in areas without a bubble," he says.

"People are just slowing down purchase decisions."

Source: The Wall Street Journal (11/21/2006)