U.S. home prices to decline 11%, Deutsche Bank says

HOME PRICES, DEUTSCHE BANK, REAL ESTATE, ECONOMY — Home prices in the U.S. will fall a further 10.5 percent and reach bottom at the end of next year’s second quarter, according to

Bank AG.

The total decline will be 38 percent measured from the estimated market peak in the fourth quarter of 2005, New York- based analysts led by Karen Weaver said in a report today. The forecast covers 100 metropolitan areas.

“Serious delinquencies are still rising rapidly in mortgages, unemployment reached a new cycle high, inventory in most parts of the country is elevated, and in some areas affordability is backtracking,” the analysts wrote.

Deutsche Bank said the current-to-trough decline in June would be 14 percent and the total drop would be 42 percent. Home-price gains and a slowing of the unemployment rate account for an improved outlook, the analysts wrote.

Prices in 20 U.S. cities fell at a slower pace than forecast in June, dropping 15.4 percent from a year earlier, according to S&P/Case-Shiller home-price index. The measure rose from the prior month by the most in four years. Employers cut 216,000 workers from payrolls last month, fewer than forecast, the Labor Department said Sept. 4.

Foreclosure moratoriums may have been enough to “turn momentum and confidence,” although such government policies “merely delay the inevitable,” the analysts wrote.

Home prices in the Los Angeles metropolitan area, the largest as measured by its share of non-prime mortgages, will fall a further 5 percent, Deutsche Bank said. Prices will drop an additional 15 percent in Riverside, California; 39 percent in the New York area; 12 percent in Washington; and 9.5 percent in Orange County, California, according to Deutsche Bank.

Prices will decline a further 1.6 percent in the San Diego area; 11 percent in Phoenix; 14 percent in Oakland, California; 4.8 percent in Chicago; and 16 percent in Las Vegas, the analysts said.