NEW YORK (Bloomberg) — JPMorgan Chase & Co. chief executive officer Jamie Dimon said he expects US home prices to drop as much as nine percent this year as even borrowers with the best credit are having difficulty keeping up their mortgage payments.

"Real estate is getting worse," Dimon said in a conference call yesterday with investors after the bank, the third largest in the US, reported first-quarter earnings. "Home prices we still expect to go down."

The bank reported a 50-percent drop in net income on $5.1 billion in write-downs and loan-loss reserves linked to home-equity loans, sub-prime mortgages and financing for leveraged buyouts. The bank last month agreed to pay $2.4 billion for Bear Stearns Cos., which had been the biggest mortgage bond underwriter, after a two-day run on the firm pushed it to the brink of bankruptcy.

Dimon's forecast is more optimistic than many homebuilding analysts and executives. Deutsche Bank analyst Karen Weaver said in February that prices may fall as much as 26 percent from the third quarter of 2007 before hitting bottom. PMI Group Inc., the second-largest mortgage insurer, last week said US housing prices will probably fall by an average 20 percent from their peak in 2006.

Dimon's outlook is more pessimistic than the National Association of Realtors, which predicts a 1.4 percent decline in the median price of existing homes this year and a 3.6 percent decline for new homes. In 2007, the NAR lowered its housing and economic forecast every month.

Last year, the US median price for a single-family home dropped 1.8 percent to $217,900, the first annual decline in records that go back to 1968, according to Lawrence Yun, chief economist at the Chicago-based Realtors association. It was the first national price drop since the Great Depression in the 1930s, he said.

JPMorgan's charge-offs of home-equity loans may double by the fourth quarter, chief financial officer Michael Cavanagh said. They totalled $447 million in the period ended March 31.

Dimon also said he believes credit markets may start to recover soon. Lehman Brothers Holdings Inc. CEO Richard Fuld, Goldman Sachs Group Inc. CEO Lloyd Blankfein and Morgan Stanley Chief John Mack have made similar comments.