Existing home sales: Are US home prices set to fall again?

There are growing signs that last year's plunge in US housing prices isn't over. After a short respite in the latter half of 2009, prices of new and existing homes could fall again.

●The median sales price of existing homes in January fell to $164,700, on par with the low reached the previous January, the National Association of Realtors (NAR) reported Friday.

●The median price of sales of new homes fell to $203,500, lower than any month last year, the Commerce Department reported Wednesday.

●One in five of metropolitan markets, which experienced upticks in 2009, have seen home values flatten or actually fall in the second half of the year, according to Zillow.com, an online real estate marketplace.

"While we have seen strong stabilization in home values during 2009, there are clear signs that they will turn more negative in the near term," said Zillow Chief Economist Stan Humphries in a release.

"There is a good chance that prices will suffer a double-dip," wrote Paul Ashworth, an economist with Capital Economics in Toronto, in an analysis. "We expect the second downward leg in prices to be fairly modest, maybe 5 percent."

Prices are soft in part because sales of existing homes dropped back in January to an annual rate of just over 5 million units, the lowest seasonally adjusted level in seven months. As a result, housing inventories – the number of months needed to sell the homes now for sale – edged back up up from 7.2 months in December to 7.8 months in January.

Sales should jump back up in the spring, because of a federal tax credit for homebuyers. "Activity should be picking up strongly in late spring as buyers take advantage of the tax credit," said Lawrence Yun, NAR chief economist, in a release.

But time is growing short, because those deals must be struck by April to qualify for the credit. And it's not clear whether the credit is creating new demand for homes or simply encouraging speeding up deals that would have happened anyway.

"The government gimmickry simply brought a temporary pause to an 'organic' decline that is still the overarching trend," Paper Economy, a real estate blog, concluded after the release of Wednesday's dismal numbers on new home sales.