US home prices could plunge 20% by next summer as a housing recession kicks in, a top economist says

The US housing market is in a recession, and home prices are poised to tumble another 20% by next summer, a top economist has warned.

"The plunging trend in sales has further to go, and prices are falling," Ian Shepherdson, the chief economist of Pantheon Macroeconomics, said in a research note published on Wednesday.

Shepherdson and his team estimated that seasonally adjusted existing-home prices slid by 0.7% in August, the third monthly decline in a row. Prices are now down about 5% from their May peak, and are poised to slide further despite a tight supply of homes, they said.

"The very low level of inventory means that a headlong collapse in prices is unlikely, but we still expect a total decline of up to 20% by the middle of next year," the economists wrote.