Tuesday, May 22, 2007

A gloomy outlook from the NAR

The National Association of Realtors is adjusting its forecast for the housing market activity in 2007. Due to problems in the subprime lending sector, expectations for existing home sales in 2007 are lowered to 6.29 million, from an earlier forecast of 6.34 million. In 2006, sales reached 6.48 million. A month ago, the NAR predicted the median existing home price to drop by 0.7% this year. Realtors are now adjusting that number to 1%, which will result in a median price of $219,800. An increase of 1.4% is expected in 2008.

The median price of a new home will probably be reduced by $100 to $246,400, as opposed to earlier estimates of a 0.4% increase. New home sales are expected to reach 864,000 in 2007 and 936 in 2008. NAR expects the median new home price to gain 2.2% next year.

NAR believes the slowdown will be moderate, because unemployment is low, and household incomes are up. This “soft landing” will probably be followed by a gradual increase in home sales in the second half of the year, according to the NAR.

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