Home prices seen picking up in 2012

Home prices are seen ticking up modestly in 2012, according to a Reuters poll released on Friday.

Existing home sales are expected to improve modestly. The forecasts from the poll are consistent with expectations the housing sector will continue to limp along in a weakened state for years to come.

A recovery in the housing market is dependent on improvement in the labor market and broader economy, analysts said.

"One of the big concerns is you've got a lot of homes where the mortgage holder is still underwater and most of those homeowners will continue to make payments," said Brown.

"It gets to be a problem, however, if somebody loses their job, somebody gets sick, there's a divorce or something where the home has to be sold."

U.S. home prices -- as measured by Standard & Poor's/Case-Shiller 20-City Composite Home Price Index -- will fall 3.8 percent for the year, before stabilizing and gaining 0.8 percent in 2012, according to the median forecast of 22 economists in the Reuters poll taken over the past week.

The expectations were improved from the previous Reuters housing poll in June, which forecast prices would fall 5.0 percent this year and rise just 0.5 percent next year.

The forecasts for the changes in the home price index for this year had a wide range, from a decline of 14.0 percent to a gain of 0.1 percent. The forecasts for 2012 had a smaller gap, from a decline of 6.0 percent to a gain of 4.0 percent.

Of 28 economists polled, 14 said that prices had either already hit bottom this year or would by the fourth quarter. Twelve respondents said prices won't reach a trough until 2012, while one forecast 2013 and one expected it would take until 2014.

In the third quarter, the pace of existing home sales is expected to come in at a 4.78 million annualized rate and will edge up to 4.95 million in the fourth quarter. Sales of previously owned homes were at an annual rate of 4.67 million units in July, according to data from the National Association of Realtors.

Economists saw the rate of home sales coming in at 5.1 million for both the first and second quarter of next year.

"New foreclosures peaked in 2009, but the inventory of foreclosed homes will decline only slowly," said David Berson, chief economist at mortgage insurer PMI Group.

Spring buying pushed home prices up for a third straight month in most major U.S. cities in June.

The Standard & Poor's/Case-Shiller home-price index showed Tuesday that prices increased in June from May in 19 of the 20 cities tracked. Prices rose 3.6 percent in the April-June quarter from the previous quarter. Neither of those numbers is adjusted for seasonal factors.