Leading Economist Says Home Prices Will Be Down 20 Percent At Lowest Point of Slump

New York–The declining U.S. economy ultimately will force home prices down by 20 percent, the chief economist at Moody’s Economy.com said this week.Mark Zandi, who co-founded Economy.com, also said the U.S. will experience a recession in the first half of 2008, the Guardian reports.”To be more precise, the economy is contracting. It’s been contracting for December, January and probably February,” Zandi said. “Another three, four, five months of contraction and that would be a recession.”Speaking at the Reuters Housing Summit in New York, he said the Moody’s Economy.com outlook had changed significantly from December, when it estimated a 13 percent decline. Home sales will bottom out in spring, and home prices will hit their lowest point in spring 2009, according to Zandi.Zandi also said that households facing foreclosure are cutting expenses, which is having a huge impact on spending and the economy–particularly in areas of the U.S. where foreclosures are high. Each foreclosure cuts the value of all homes on a block by nearly 1.5 percent, according to Zandi.