Americans should brace themselves for at least another year of plunging house prices, two leading Wall Street economists said yesterday.

The slump, they argue, is, at best, only halfway through its cycle, with the inventory of unsold homes continuing to rise.

Carl Weinberg, at High Frequency Economics, said yesterday: “We are nowhere near the bottom at all.”

Mr Weinberg identified two factors that could keep property prices falling: first, the rising number of unsold homes; and secondly, the fact that the number of sub-prime mortgages, which will reset at a higher interest rate, will not peak until the end of the year. It is expected that many of those borrowers will not be able to absorb the rise in repayments.

Kevin Logan, senior market economist at Dresdner Kleinwort in New York, said that the American housing slump - the worst for 16 years – is halfway through its cycle, or not even that, and that demand for property would continue to recede.

He said that residential investment – funds spent on existing homes being improved and new homes being constructed – has been falling at more than 10 per cent for some time and would continue to fall for “several quarters”.

This fall in investment has already hit economic growth, slicing almost 1 per cent off US gross domestic product growth.

Mr Weinberg is expecting the US economy to stagnate during the second half of this year and is worried that it will tumble into a recession next year.

“We are in uncharted waters. Whether the US falls into a recession hinges on how the financial crisis that we have seen impacts the real economy, if at all,” he said.

Last month, the National Association of Realtors published American house price statistics and home sales activity for the second quarter of the year.

Sales of existing homes fell across 41 states during the April-to-June quarter, while average house prices were down in a third of the metropolitan areas surveyed.

In Ohio, the number of existing homes sold fell by 7.3 per cent over the three-month period.

Over the whole Midwest, activity was down 8.4 per cent compared with the same period the year before – the average house price in the region was down 2.2 per cent to $163,500 (£80,600).

The Federal Reserve is widely expected to cut US interest rates by a quarter of a percentage point to 5 per cent when it meets on September 18.

However, it will not have seen the next set of key US housing figures – the statistics on existing and new home sales are not due to be published until September 25 and 27 respectively.