US home prices may slip 20pc

Home prices in the United States may decline 20 per cent and not recover until 2012 if the economy slips back into recession, Moody's Analytics says.

Odds of a double-dip contraction have risen to one in four from almost one in five.

The most likely scenario, Moody's Analytics says, is that home values drop 5 per cent as economic growth slows to 3 per cent this year from 5 per cent in the fourth quarter.

"The economic recovery is losing momentum," Celia Chen, a senior director at Moody's Analytics said. "Retailing, housing, manufacturing and most importantly the job market have weakened in recent weeks."

Overall US employment fell by 131,000 jobs in July, the Labor Department reported last week.

- BLOOMBERG