Home prices could dip another 6% to 7%, before hitting rock bottom in early 2012, according to analysts at JPMorgan Chase (JPM: 32.62 -2.66%).
If that is the case, prices will fall about 37% from peak levels reached before the 2008 housing meltdown.
In the banking giant's September home price monitor report, analysts said the outlook is bleak, noting persistently weak housing demand. The firm said existing home sales in July hit a disappointing annualized pace of 4.67 million units, while mortgage applications plunged 14% in August.
JPMorgan Chase analysts warned policymakers are running out of tools to boost housing demand. The fed funds rate has been near zero for a few years, and Federal Reserve Chairman Ben Bernanke has committed to keeping the rate low through 2013.
Read it allJPMorgan analysts forecast a home sales pace of 5 million housing units for 2011, but remain cautious saying the estimate may move toward the downside.