Despite some small gains over the spring and summer, U.S. home prices are falling again in most major cities. The Standard and Poor's/Case-Shiller Index showed prices dropped in September from August in 17 of the 20 cities tracked, marking the first decline after five straight months where at least half of the cities in the survey showed monthly gains.

"From 2000 to 2007 there was a severe over production of homes and we're still working that off," said Economist James Hughes, Dean of the Edward J. Bloustein School of Planning and Public Policy. "Plus, people are reluctant to buy a home because they're afraid they would be purchasing a declining asset."

Some people can't qualify for loans or meet the higher down payment requirements. "Banks aren't just giving out loans," said Hughes. "It has gotten much tougher to obtain a loan despite the record low interest rates."

"In order to buy a home or trade up, you have to be able to sell the one you have," said Hughes. "People are very reluctant to purchase right now. The whole chain of demand from the bottom of the market to the top is in trouble."

Hughes also believes the weak job market and high unemployment rate are deterring people from buying a home right now. "Many households still have an excess of debt, plus they're worried about the economy so they're opting not to take a chance. There are no short term cures," said Hughes. "It could be 2014 before the market stabilizes and prices begin to inch up again."