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NAR Optimistic About Housing Market01-09-08 | News

NAR Optimistic About Housing Market

Over the next few months, existing home sales are expected to hold fairly steady as indicated by pending sales activity, then rise later in the year and continue to improve in 2009, according to the latest forecast by the National Association of Realtors.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in November, fell 2.6 percent to a reading of 87.6 from a strong upward revision of 89.9 in October, but remains above the August and September readings and indicates a broad stabilization. The index was 19.2 percent below the November 2006 level of 108.4.

Lawrence Yun, NAR chief economist, said there is a pull and tug exerting itself on the market.

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The PHSI in the South rose 2.3 percent in November to 100.7 but is 19.8 percent below a year ago. In the West, the index slipped 2.1 percent to 86.6 but is 18.5 percent lower than November 2006. The index in the Midwest fell 4.1 percent in November to 82.1 and is 18.6 percent below a year ago. In the Northeast, the index dropped 13 percent in November to 70.1 from a spike in October, and is 19.1 percent below November 2006.

According to the NAR, existing home sales for 2007 will probably total 5.66 million, the fifth highest on record, then edge up to 5.70 million this year and 5.91 million in 2009, compared with 6.48 million in 2006. Existing home prices for 2007 are likely to be down 1.9 percent to a median of $217,600, hold even this year and then rise 3.1 percent in 2009 to $224,400.

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New home sales are projected at 773,000 for 2007, and declining to 669,000 this year before rising to 730,000 in 2009, but well below the 1.05 million 2006. With an appropriate slowdown in production, housing starts, including multifamily units, are forecast at 1.36 million for 2007 and 1.09 million this year before edging up to 1.10 million in 2009; starts totaled 1.80 million in 2006. The median new-home price should drop 2.1 percent to $241,400 for 2007, and then rise 0.4 percent to $242,200 this year and gain another 5.9 percent in 2009.