Housing Market Faces Headwinds

This morning the Case-Shiller HPI dropped by -1.1% in Q4 on a non-seasonally adjusted basis. The index was down -2.51% on an annual basis. This compares to a 3.31% quarterly rise in the third quarter.  I continue to believe that housing prices will come under continued pressure throughout 2010 after the expiration of the government’s new extended/expanded home buyer tax credit and upward pressure on mortgage rates as the Fed cease buying agency MBS.