Flash - When will US housing prices bottom out?

Housing market correction and its impact on the economy

The problem of default on subprime housing loans (those made to households with poor credit scores) has increased the degree of uncertainty over the course of the US economy. While financial markets have been concentrating on the level of damage to financial institutions' balance sheets that these subprime loans are inflicting, in terms of risks to the overall economy we are more concerned that the current ongoing slide in housing prices is cooling spending among households that had been relying on unrealized gains on housing assets. As the housing market is important for the US economy, in this report we look at the possible timing of a bottoming out of housing prices and the economic impact of the decline in prices.