Jan Hatzius, chief U.S. economist at Goldman Sachs, expects the Federal Reserve to step back into the markets in a big way after the latest round of weak economic data was punctuated this morning by downright awful housing numbers. Hatzius said housing prices may fall a "little less" than 4 percent on average across the country in the next one to two years, as housing inventory remains swollen.

"Ultimately, the best predictor of what happens to house prices really is the amount of excess supply, and there's still a lot of it," he said.