Home prices in the United States will continue to fall as foreclosures increase over the rest of the year, though commercial real estate prices have bottomed out, according to Mark Zandi, chief economist at Moody's Analytics.

Speaking at Moody's Corp.'s investor day, Zandi said he expects home prices to fall 5% from the first quarter of 2010 to the first quarter of 2011 as more homes go into foreclosure and are subject to short sales.

Those low-price sales will not be offset by much of an increase in regular home sales, he predicted.

Home prices would have fallen further had it not been for the administration's Home Affordable Modification Program, he said. Zandi said he expects home prices to return to late-2008 levels in late 2012.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.