CHESSNOID

Foreclosures in the United States have not stopped.  It is still increasing and there is a shadow inventory of bank REOs sitting empty and not for sale.  This is probably due to accounting rules of mark to market.  Regardless, the efforts of keeping those in active foreclosure and living in the homes is not strong enough.  Banks do not want to modify loans simply because it makes losses official and then must be officially reported on the books.

The other issue with the housing recovery taking place is joblessness.  As the unemployment rate continues to edge up, that means many people with no jobs simply can not pay for the homes.  The idea that making credits available to new homeowners just does not fix the true problem of the housing crisis.

NEW YORK (Reuters) –

The meltdown of the U.S. housing market is not over yet, and home prices will soon start trekking downward again as a flood of foreclosures looms, a well-known economist said on Wednesday.

Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania, said in an interview with Reuters home prices will resume their decline by early next year as foreclosure sales pick up again.

“The housing crash is not over,” he said.

The U.S. housing market has suffered the worst downturn since the Great Depression, and its impact has rippled through the recession-hit economy as well as the rest of the world.

A setback for the hard-hit housing market could portend problems for the U.S. economy.

Home prices, as measured by the Standard & Poor’s/Case-Shiller U.S. National Home Price Index, will trough in the third quarter of 2010 after declining 38 percent, Zandi said.

The index peaked in the second quarter of 2006 and hit a trough in the first quarter of 2009, a drop of about 32 percent.