Home prices across much of the country and in Utah are likely to fall through at least late 2009, economists say, and in some markets the trend could last even longer depending on the severity of the anticipated recession.

In hard-hit areas such as California, Florida and Arizona, the grim calculus is the same. More and more homes are going up for sale, but fewer and fewer people are willing or able to buy them.

Even in Utah, where the economy has remained comparatively strong, Wells Fargo economist Kelly Matthews has predicted an overall home-price "correction" of as much as 20 percent. He thinks prices have fallen only about 7 percent so far and will fall more through 2009 and even into 2010 - with most of the pain being felt at the higher price ranges. Economic forecasting firm Moody's Economy.com agrees that Utah's residential real estate market could continue to be weak through next year and into 2010.

Homes are being sold along the Wasatch Front, and Realtors insist that because of the pressure being put on prices, now is a good time to buy. But Salt Lake Board of Realtors President Jillinda Bowers recently estimated that 75 percent of sales in Salt Lake County are below $300,000. And that may be the case for a while in a market that likely peaked late last year after nearly four years of big home-price increases and now faces a variety of challenges that have spread across the nation.

Those include rising unemployment, falling wages, tighter lending standards and escalating mortgage rates - all of which are reducing an already diminished pool of would-be buyers.

''The number one thing that drives housing values is incomes,'' said Todd Sinai, an associate professor of real estate at the Wharton School at the University of Pennsylvania. ''When incomes fall, demand for housing falls.''

Despite the government's move to bolster the banking industry and buy up or renegotiate bad loans, home loan rates rose again last week, reflecting concern that the Treasury will borrow heavily to finance the rescue. The average rate for 30-year fixed rate mortgages was in the mid-6 percent range, up from 6.06 percent the week before.

Although banks are moving aggressively to sell foreclosed properties, the number of empty homes nationally is hovering near its highest level in more than half a century and inventories in Utah are growing. As of June, 2.8 percent of U.S. homes previously occupied by an owner were vacant. Nearly 1 in 10 rentals was without a tenant. Both numbers are near their highest levels since 1956, the earliest year for which the Census Bureau has such data.

At the same time, the number of people who are losing jobs or seeing their incomes decline is rising. The U.S. unemployment rate has climbed to 6.1 percent, from 4.4 percent at the end of 2007, and wages for those who still have a job have barely kept up with inflation. Utah is faring better on the jobs front, with an unemployment rate of 3.5 percent, though that's up from 2.8 percent the year before. On the wage front, paychecks in Utah aren't faring any better than those nationally, and historically have fared worse.

One reliable proxy of housing values - the ratio of home prices to rents - indicates that in many cities, prices are still too high relative to historical norms.

In Miami, for instance, home prices are about 22 times annual rents, according to analysis by Moody's. The average figure for the past 20 years is just 15 times annual rents. The difference between those two numbers suggests that a home valued at $500,000 today might be worth only $341,000 based on the long-term relationship between prices and rents.

The price-to-rent ratio, which provides one measure of how much premium home buyers place on owning rather than renting, spiked across the country earlier this decade.

It increased the most on the coasts and somewhat less in the middle of the country. Economy.com's calculations show that while it remains elevated in many places, the ratio has fallen sharply to more normal levels in places like Sacramento, Calif., Dallas and Riverside, Calif.

Moody's analysis says that in recent years home prices have risen much faster than rents in the Salt Lake area, putting that relationship out of whack. The only way to restore that relationship is for rents to rise and home prices to fall.

One upside of falling prices nationally is that pending sales of existing homes in September were at their highest rate since June 2007 as buyers took advantage of bargains. That said, the current housing downturn is much more national in scope and severe than any other in the postwar period, partly because of the proliferation of risky lending practices. Today, foreclosures are running ahead of the downturn in the economy, a reversal of previous housing slumps.

''We are in uncharted waters,'' said Brian Bethune, an economist at Global Insight, a research firm.

To cushion themselves from potential losses if homes lose value, Fannie Mae and Freddie Mac, the mortgage finance companies that the government took over in September, have increased fees on loans made to borrowers who have good but not excellent credit records, even for those who are making down payments as big as 30 percent.

Those higher fees are generally invisible to borrowers because banks factor them into mortgage interest rates. Although the national average rate for a 30-year fixed-rate mortgage is in the mid-6 percent range, mortgage brokers say the rates for many borrowers in the Southwest or Florida can be as high as 8 percent, especially for so-called jumbo loans that are too big to be sold to Fannie Mae and Freddie Mac. (Those loan limits vary by area from $417,000 to roughly $650,000.)

Higher interest rates result in bigger monthly payments, pricing some potential buyers out of the market. For example, monthly payments are $2,700 on a 6 percent 30-year, fixed-rate loan of $450,000. If the interest rate rises to 7 percent, those monthly payments jump to $3,000. All things being equal, when rates rise prices generally fall.

This month, Fannie and Freddie canceled a fee increase that would have applied to markets where home prices are falling, but the companies still have many other fees in place. In an effort to help drive down rates, the Treasury Department has announced plans to buy mortgage-backed securities issued by Fannie and Freddie. The government also recently increased the amount of loans the companies can buy and hold.

Still, those efforts will take time to have an impact and it is not clear whether they will be sufficient to get banks to lend more freely, especially in areas where jumbo loans make up a bigger percentage of lending, such as New York and parts of California and Florida. Economists say that prices in those places will probably fall further.