Mark Zandi, the chief economist for financial services firm Moody's Analytics, is forecasting a massive crash in housing prices. Zandi correctly predicted in May that housing activity in America would plummet through the summer, and prices in the more bubbly markets like Flagstaff, Arizona, Boise, Idaho, Charlotte, North Carolina and Austin, Texas would begin falling. (Related: New single-family home sales plunge to 6 1/2 year low as mortgage rates and housing prices continue to rise.)
He further warned that, once the recession fully hits the United States, housing prices in nearly half of the regional housing markets could plummet by at least 20 percent. If the recession doesn't impact the American economy fully, housing prices are still expected to fall between 10 to 15 percent.
Zandi added that the entire U.S. housing market could suffer a nationwide pullback in prices of around five percent, regardless of a recession.
Housing inventory in the U.S. is at its highest level since April 2009, as many real estate agents struggle to get rid of listed properties due to soaring mortgage rates and home prices.
According to Moody's, 183 of the country's 413 largest regional housing markets are "overvalued" by 25 percent or more as of August.
Boise, Idaho, is by far the most overvalued, where the current average house is worth $526,050, or almost 72 percent higher than the average. This is followed by Charlotte, North Carolina, where home prices are 66 percent higher at $406,137, and Austin, Texas, with 61 percent higher housing prices than the average at $661,337.
Flagstaff, Arizona, is overvalued by 61 percent, with average home prices of $668,845. Nashville, Tennessee, is overvalued by 54 percent and has housing prices of $460,447. In Miami, Florida, housing prices are overvalued by 34 percent at $552,082.
Moody's analysis only has a handful of places around the country where housing prices are considered undervalued.
The most undervalued city in the country is Decatur in central Illinois, where the average house costs $92,129, or around six percent undervalued. It is followed by Montgomery, Alabama, where the average house costs $135,742, or 2.6 percent undervalued, and Grant's Pass, Oregon, where housing prices are undervalued 3.1 percent at $418,440.
Consumer confidence in the real estate market is plummeting, indicating that more Americans believe a recession is on the way. The Fannie Mae Home Purchase Sentiment Index shows that consumer confidence has reached its lowest point since 2011.
"Surveyed consumers continue to express pessimism about home buying conditions, with only 17 percent of respondents reporting it's a good time to buy a home," it said in a release. "Meanwhile, the percentage of consumers believing it's a good time to sell has begun ticking downward in recent months, falling from 76 percent in May to 67 percent in July."
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