Even though home prices are rebounding in some parts of the country, the overall housing market won't start turning the corner until next spring, according to the latest forecast from Fiserv.
The forecast, which tracks 384 housing markets, predicts that nationwide home prices will dip another 1% between March 2012 and March 2013.
At that point, prices will start gaining momentum, said Fiserv, which analyzed data from both the Fiserv-Case-Shiller home price index and the Federal Housing Finance Agency. The financial analytics firm is forecasting that nationwide home prices will climb 5% between March 2013 and March 2014.
For the time being, though, the recovery will remain choppy. As Fiserv pointed out, eight out of the 10 markets that saw the biggest prices gains over the past 12 months are projected to fall the most over the next year. These include some markets that were hit hard by the housing bust -- Detroit, Phoenix and Miami, to name a few.
And in Florida, several cities still have many months of falling prices to face before a sustained recovery will take shape, Fiserv projected. In the Naples area, Fiserv forecasts a price decline of close to 14% during the 24 months ending March, 2014. Miami's home prices are expected to plunge 13.4% and Fort Lauderdale's are projected to fall 11.9%.
Meanwhile, in other cities, prices will be lifted by a shrinking supply of homes for sale and fewer foreclosures on the market, said David Stiff, Fiserv's chief economist.
Inventories of homes for sale have dropped to their lowest levels since 2004, he said. Part of the reason is that many underwater homeowners can't afford to pay the difference between what they owe on their mortgage and their home's value -- and therefore can't afford to sell their home. Those who do have equity in their home are sitting on the sidelines, waiting for home prices to improve before they sell.
Also helping to lift home prices in some areas is the fact that fewer foreclosures are taking place. Instead, more struggling homeowners are selling their homes in short sales, which tend to fetch higher prices than foreclosures.
One thing that could derail the housing market's recovery is the shaky economy, said Stiff. If confidence in that drops -- either because of financial crisis in Europe or the pending "fiscal cliff" here in the U.S. -- it could take home prices down.
However, buying a home is historically cheap, he said. And if consumer confidence falls, it would probably result in continued record low -- or even lower -- mortgage rates. That would mean even better affordability, which could be enough to offset the economic gloom.
"We may be at a point where housing markets can finally withstand a weak economy," said Stiff.