Dim Forecast for Housing and Economy

ResiLandscape report, issued by analysts at Moody’s Investors Service warn that there’s a change the country will slide back into a recession, and they forecast a “longer and deeper housing correction.”

The chief economist for Moody’s Analytics said “We have lowered the near-term economic outlook and raised the risk of a double-dip recession from one in four to one in three.” 

He also says the US recovery has lost significant momentum since the spring.  Retailing, housing, business investment, and industrial activity have all weakened, and the job market is no longer improving.  After ticking higher to 9.6% in August, he is expecting the nation’s unemployment rate to drift back into double digits in the coming months.

Celia Chen, senior director for Moody’s Analytics expects house prices to fall until the 3rd quarter of 2011, significantly longer than Moody’s previous projections of a 1st quarter 2011 bottom in homes.  She says the flood of 4 million homes either in late-stage delinquency or foreclosure is clogging the foreclosure pipeline from the servicers to the courtrooms, creating delays.

Distortions due to the first time homebuyer tax credits previously offered are partially to blame for the expected double-dip.

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