Economists continued to predict home prices will decline only slightly in 2012, falling 0.4 percent for the entire year, and will increase thereafter, according to the June 2012 Zillow Home Price Expectations Survey, compiled from 114 responses by a diverse group of economists, real estate experts and investment and market strategists. 

For the first time, the individual economists surveyed were largely in agreement on the trajectory of home prices nationally, signaling that a true bottom may be imminent.

The survey, sponsored by leading real estate information marketplace Zillow, Inc. and conducted by Pulsenomics LLC, is based on the projected path of the S&P/Case-Shiller® U.S. National Home Price Index during the coming five years.

However, a majority (56 percent) of respondents also believe that, in five years, the U.S. homeownership rate will be below 65.4 percent, the rate recorded in the first quarter of 2012. One in five believe the homeownership rate will be at or below 63 percent, testing or breaking the 62.9 percent rate established in 1965, the lowest on record.

"It's good to start to see some convergence of expectations among economists, as it lends further support to the claim that a bottom is real," said Zillow Chief Economist Stan Humphries. "However, the fact that more than half of respondents believe that the homeownership rate will fall lower should be a sobering reminder that significant challenges remain ahead for the housing market, from negative equity to millions of foreclosed homeowners who now have impaired credit, making a return to homeownership harder than it would be otherwise."

Looking further into the future, respondents' expectations remained relatively consistent with their March 2012 outlook.

The most optimistic[i] quartile of panelists predict a 1 percent increase in 2012, on average, while the most pessimistic[ii] predict an average decline of 2 percent.  The June survey results also indicate that most of the panelists expect home prices to increase for the remainder of this year after falling 2 percent in the first quarter.

While the stronger signals of an imminent market bottom and turn are encouraging, the expected pace of housing recovery over the coming three years is significantly weaker now than it was two years ago. 

"In June 2010, the average cumulative appreciation in U.S. home prices expected by our panel was 10.3 percent for the years 2012 through 2014.  Now, two years later, the average prediction among our experts for the same period is just 3.5 percent," said Terry Loebs, founder of Pulsenomics.  "This translates into $1.25 trillion less housing wealth than expected nationally over the coming three years."