Home prices are dropping in the nation's largest cities and are expected to keep falling next year, as fewer people purchase homes and millions of foreclosures come on to the market.H/T AP
The AP article attributes part of the downward pressure to foreclosures:
Millions of foreclosures are forcing home prices down. Many people are holding off on making purchases because they fear the market hasn't bottomed out, analysts say.
Foreclosures likely will remain high for the next two years, said Mark Zandi, chief economist at Moody's Analytics.
Despite the downward trend, mortgage rates are on the rise:
And more people might be less inclined to buy now that mortgage rates are rising again. In the last month, rates on fixed mortgages have surged more than a half-point to near 5 percent.