NAR: Near-Term Home Sales to Hold in Modest Range
Washington, DC -- August 08, 2007 -- The housing market will probably hold close to present levels in the months ahead, according to the latest forecast by the National Assn. of REALTORS®.
Lawrence Yun, NAR senior economist, said he isn’t looking for any notable changes in sales activity. “Existing-home sales should be relatively stable over the next few months, holding in a modest range, with some pent-up demand growing from buyers who’ve been on the sidelines,” he said. “Mortgage disruptions will hold back sales over the short term, but long-term fundamentals are favorable. A modest upturn is projected for existing-home sales toward the end of the year, with broader improvement to include the new-home market by the middle of 2008.”
Existing-home sales are forecast at 6.04 million in 2007 and 6.38 million next year, below the 6.48 million recorded in 2006. New-home sales are expected to total 852,000 this year and 848,000 in 2008, down from 1.05 million in 2006. Housing starts, including multi-family units, are likely to total 1.43 million in 2007 and 1.40 million next year, below the 1.80 million units started in 2006.
“With the population growing, the demand for homes isn’t going away – it’s just being delayed,” Yun said. “More buyers, and cutbacks in new construction, will eventually draw down the inventory levels and support future price appreciation, but general gains will be modest next year. Serious buyers today have a long-term view of housing as an investment – speculators have left the market.”
Existing-home prices should ease by 1.2% to a median of $219,300 in 2007 before rising 2.0% next year to $223,600. The median new-home price will probably fall 2.3% to $240,800 in 2007, and then rise 2.3% next year to $246,300.
The 30-year fixed-rate mortgage is forecast to average 6.7% in the fourth quarter and then ease to the 6.5% range next year.
Growth in the U.S. gross domestic product (GDP) is projected to be 1.9% this year, down from a 2.9% growth rate in 2006; GDP is expected to grow 2.8% next year.
The unemployment rate is estimated to average 4.6% this year, unchanged from 2006. Inflation, as measured by the Consumer Price Index, is likely to be 2.7% this year, down from 3.2% in 2006. Inflation-adjusted disposable personal income should rise 3.1% in 2007, the same as last year.