US house prices 'at tipping point'

Moody's Economy.com expects US house prices to decline in 113 metropolitan areas, with values in the Northeast, Florida and California slumping the most.

The forecasting firm projects that the median sales price for an existing home will decline in 2007 by 3.6%, which would be the first decline for an entire year in home prices since the Great Depression of the 1930s.

The report, titled "Housing at the Tipping Point", projects that 133 of the nation's 379 metropolitan areas would suffer price declines.

The biggest percentage price decline is forecast for Danville, Ilinois, where prices have already fallen by 18.7 percent from the peak in the second quarter of 2005 to a low-point in the first three months of this year.

Price falls are expected to be concentrrated in California, Florida and the Northeast corridor from southern Maine to south of Washington, D.C.

73 of the areas with price declines were forecast to hit their lowpoint by the end of this year with the rest seeing a trough for prices in 2007 or later.

"Prices are going to go down and stay down for awhile. It will take at least a couple of years to work off the excesses of the last decade," said Mark Zandi, chief economist at Moody's Economy.com.

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