The chief economists of the National Association of Realtors® (NAR)
on Thursday predicted that sales of existing homes will probably
remain flat through late spring and then begin a gradual recovery during the
second half of 2008.
Lawrence Yun made the forecast based on the release of NAR's
Pending Home Sales Index (PHSI) for January. This index, based on home sale
contracts signed during the month, is a forward looking indicator for the sales
of existing houses over the following several months. The PHSI for January was
unchanged from December levels at 85.9 but was 19.6 percent below the January
2007 reading of 106.8.
"This additional sign of a stabilizing market is encouraging, and our
members are telling us there's been a pickup in shopping activity."
Yun said. "Our hope is that the increased traffic of buyers looking at
homes will translate soon into more contract offers."
Yun said that many buyers have been sitting back anticipating higher
for both FHA and conventional loans. These, he said, "will
increase consumer choice and provide greater access to lower interest rate mortgages
in high-cost regions. Therefore a notable rise in home sales can be anticipated
in the second half of the year.
Existing-home sales are expected to remain flat around an annual level of 4.9
million in the first half of the year before improving to a 5.8-million pace
in the second half. Total sales for 2008 are projected at 5.38 million, but
are then seen to rise to 5.60 million in 2009. The existing-home price is projected
to decline 1.2 percent to a median of $216,300 this year, and then increase
to $223,800 in 2009.
New-home sales will probably decline 23.7 percent to 590,000 this year before
rising 7.2 percent to 633,000 in 2009. There is a longer wait for recovery for
new construction, however. Housing starts, including multifamily units, are
expected to fall 25.1 percent to 1.01 million this year and another 2.7 percent
to 987,000 in 2009.
"As builders sharply cut back production, vacant new-home
inventory has consistently declined over the past year-and-a-half," Yun said.
"That will permit a quicker return to balanced market conditions in many local
areas." The median new-home price is likely to fall 6.1 percent to $232,200
this year, and then rise 5.1 percent in 2009.