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O.K., I admit it. I like reading about Real Estate market statistics. I’m hoping to glean pearls of wisdom that I can share with my clients. Where is this market going? How long is this current slow down going to last? When will be boom kick back in? When can I start thinking about my home as an investment again, rather than as shelter for my family? Here are some recent pearls. Come glean with me. . .
NAR: Soft Landing for Home Sales
The NATIONAL ASSOCIATION OF REALTORS® still expects more than 6 million existing-home sales in 2007, but stricter lending standards and a decline in subprime mortgage origination have contributed to somewhat lowered expectations compared with earlier forecasts, according to the latest projections from NAR.
Lawrence Yun, NAR senior economist, says one benefit for the market is the disappearance of speculative behavior, which contributed to abnormal price growth.
“Home buyers today are purchasing for the long term, generally with a realistic expectation of modest gains over time,” Yun says. “Housing first and foremost is shelter. Second, it’s a long-term investment that slowly builds the greatest amount of wealth for most families. It’s good that we’re getting beyond the tendency of some buyers to view housing as a temporary asset to accumulate short-term wealth, which is not to be expected in a normal market.”
Housing Projections
NAR expects the following in home sales this year:
- Existing-home sales are likely to total 6.29 million this year and 6.49 million in 2008, compared with 6.48 million last year.
- New-home sales are projected at 864,000 in 2007 and 936,000 next year, lower than the 1.05 million in 2006.
- Housing starts should total 1.46 million units this year and 1.52 million in 2008, down from 1.80 million last year.
“If it weren’t for a favorable economic backdrop, housing would probably have a hard landing,” Yun says. “As it is, we see this as a soft landing with home sales rising gradually in the second half of the year and prices recovering a bit later.”
The 30-year fixed-rate mortgage should rise slowly to 6.5 percent by the fourth quarter, NAR predicts. Last week, Freddie Mac reported the 30-year rate was 6.16 percent.
The national median existing-home price is forecast to slip 1 percent to $219,800 this year, and then rise 1.4 percent in 2008. The median new-home price is expected to be essentially unchanged at $246,400 in 2007, and then rise 2.2 percent next year.
The unemployment rate will probably average 4.6 percent this year, unchanged from 2006. Inflation, as measured by the Consumer Price Index, is estimated to decline to 2.5 percent in 2007, down from 3.2 percent last year. Growth in the U.S. gross domestic product is projected at 2.1 percent in 2007, lower than the 3.3 percent growth last year. Inflation-adjusted disposable personal income should rise 2.6 percent in 2007, the same as last year.
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