Real Estate Market
If you think the real estate market is toast, guess again.
Instead, the existing-home market will coast into 2007 on roughly the same bearing it’s on now, National Association of Realtors chief economist David Lereah told the NAR’s national convention today in New Orleans.
Acknowledging that prices have corrected this year from the hyper market of 2003-05, home resales should stay at “roughly the same level next year,” according to an NAR press release reporting Lereah’s market forecast.
But “there will be some additional decline in the new-home market, according to the forecast.
“Overall home price gains will be modest,” said Lereah, and sellers are adjusting to the market transition. “Home sellers are becoming realistic about current market conditions and are now offering more competitive pricing, in addition to some incentives or concessions — especially to help first-time buyers.
“We now have the most favorable market for home buyers in several years, and most sellers — who’ve been in their home for a normal period of homeownership — are still seeing very healthy returns on their investment. Conditions for buyers have improved because sellers are flexible now and mortgage interest rates are near historic lows. The market promises to be more balanced between buyers and sellers by early spring, supporting future price growth,” Lereah said.
Although this will be the third-best sales year ever for existing homes, with 6.47 million units sold, that’s still an 8.6 percent decline from 2005. Lereah expects 6.43 million used homes to sell next year, a 0.6 percent decline.
But new-home sales, which are projected to fall 16.8 percent to 1.07 million this year, will drop another 8.7 percent in 2007 to 975,000 as builders cut back, said Lereah.
Total housing starts this year will probably fall 10.6 percent to 1.85 million units, and then decline another 11.8 percent to 1.63 million in 2007, he predicts.