Fannie Mae Sees Home Sales Decline

There were 4 million homes listed with brokers for sale as of July. It would take a record 12.5 months for those properties to be sold at that month's sales pace, according to the Chicago- based Realtors group. Courtesy of Pleasant Realty

Fannie Mae, the largest U.S. mortgage finance company, lowered its forecast for home sales this year, projecting a 7 percent decline from 2009. A drop in demand after the April 30 tax credit expiration suggests weakening home prices in the third quarter, according to the report. Lower home prices will keep inflation low and give consumers more choices for home buying.

''The best thing that could happen is for prices to get to a level that clears the market,'' said economist Joshua Shapiro, who predicted prices may fall another 10 percent to 15 percent. ''Right now, buyers know it hasn't hit bottom, so they're sitting on the sidelines.''

About 2 million houses will be seized by lenders by the end of next year, according to Mark Zandi, chief economist of Moody's Analytics. He estimated prices will drop 5 percent by 2013.

- Courtesy of Bloomberg News