Case/Shiller Home Price Index Finds Prices Falling Faster in Biggest Cities

Millions of foreclosures are forcing home prices down. Many people are holding off on making purchases because they fear the market hasn't bottomed out, analysts say.

Foreclosures likely will remain high for the next two years, said Mark Zandi, chief economist at Moody's Analytics.

Several lenders temporarily halted action after evidence surfaced that some used flawed foreclosure documents to take people's homes. Some banks have resumed foreclosures at a more measured pace.

Also, the number of homeowners who owe more than their house is worth is expected to remain high. They are more likely to default if they run into trouble, Zandi said. Homeowners who have equity can sell their homes if they face a job loss, divorce, or illness that makes it impossible for them to pay their mortgage.

And more people might be less inclined to buy now that mortgage rates are rising again. In the last month, rates on fixed mortgages have surged more than a half-point to near 5%.

Most experts expect the declines to continue through mid-year with prices on average to lose another 5% to 10%. The worst price drops will come from cities with a struggling economy and the highest foreclosure rates, while those with better job growth will fare better.

Home prices have declined in 18 of the 20 cities in the past year.