 |
| 30 Yr Fix |
5.94% |
-0.16% |
| 15 Yr Fix |
5.63% |
-0.15% |
| 1 Yr ARM |
5.15% |
0.03% |
| 5/1 ARM |
5.90% |
-0.10% |
| 30 Yr Tres |
4.06% |
0.03% |
| Fed Prime |
5.00% |
-0.25% |
|
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NAR Forecast Reveals A Wee Bit Of Gloom
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The National Association of Realtors has backpedaled on previous
housing forecasts with it U.S. Economic Outlook report for June released on
Wednesday.
NAR has consistently asserted that the housing bubble would not burst
but rather would deflate and, when it happened, there would be a soft landing.
The Economic Outlook report released on January 10, 2007 stated, "After bottoming
in the fourth quarter of 2006, existing-home sales are forecast to gradually
rise through 2007 and into 2008, while new-home sales should turnaround by summer."
Long-time NAR chief economist David Lereah predicted that
annual totals for existing-home sales would be fairly comparable between 2006
and 2007. "We have to keep in mind that we were still in boom conditions during
the first quarter of 2006 with a high sales volume and double-digit price appreciation.
We are starting 2007 from a relatively low point, so even with a gradual improvement
in sales it'll be pretty much of a wash in terms of annual totals. The good
news is that the steady improvement in sales will support price appreciation
moving forward."
The June report is the second overseen by the new NAR chief economist Lawrence
Yun following the departure of the consistently upbeat
Lereah. Of course in those two months much has happened; lending standards
have been tightened, high risk buyers have at least temporarily been pushed
to the sidelines, and interest
rates have risen. Whether coincidental to the changing of the guard at NAR
or not, for the last two months projections for the recovery have been dialed
back.
The June forecast is for sales of existing homes to total 6.18 million in 2007
year and 6.41 million next year compared to 6.48 million in 2006, a negative
change of 4.6 percent. New-home sales will total 860,000 in 2007 and 901,000 in 2008 compared with 1.05 million last year, a decline of 18.2 percent.
Housing starts are now projected at 1.434 million, a precipitous drop of 20.4
percent from last year but will increase to 1.487 million in 2008 (+3.6 percent.)
Both existing and new home prices are expected to decline this year from 2006
levels. The median existing home price will be $219,100 (-1.3 percent) and new
homes will sell for a median price of $240,800 (-2.3 percent.) Both categories
of homes are still projected to bounce back price wise next year, coming in
at a median of $222,700 and $247,000 respectively.
It is most instructive, however, to look at these figures side by side with
those forecast by NAR in January and April to see how the Association's
conviction about a soft landing is cooling and how fast that cool-down has been.
| Economic Factor |
Jan 2007 |
April 2007 |
June 2007 |
| 2007 Projections |
|
|
|
| Existing Home Sales |
6.42 m |
6.34 m |
6.18 m |
| New Home Sales |
.957 m |
.904 m |
.860 m |
| Housing Starts |
1.51 m |
1.47 m |
1.434 m |
| Median Price, Ex Homes |
$222,100 |
$220,300 |
$219,000 |
| Median Price, New Homes |
$248,900 |
$246,200 |
$240,800 |
| 2008 Projections |
|
|
|
| Existing Home Sales |
|
6.520m |
6.408m |
| New Home Sales |
|
.935m |
.901m |
| Housing Starts |
|
1.55m |
1.486m |
| Median Price, Ex Homes |
|
$223,824 |
$222,700 |
| Median Price, New Homes |
|
$251,124 |
$247,000 |
*The January report did not make predictions for 2008.
|
Comments (6)
| I was hoping to see the market improve this summer. I see so many for sale signs in my neighborhood staying up for a long time. We have three houses with wood on the windows and that means they lost them to the bank. The real estate market is suppose to pick up in the summer. It is not picking up in Fontana. Is it picking up in the high priced areas?
What will happen in my area if people keep losing their houses? Will it affect my loan?
Dan in Fontana |
|
| Above Posted By:
Dan in Fontana
| Fri, 22 Jun 2007 11:27:08 EST |
| I am sorry to predict doom and gloom, but I don't believe there will be a correction any time soon! (at least for California). The notice of defaults for the first quarter this year in Cali are at an all time high and only increasing. Once those that are not reinstated become REO's, then we will see some real price decreases. The banks must lower their prices at some point when their inventory is too high. |
|
| Above Posted By:
anonymous
| Sun, 10 Jun 2007 09:30:54 EST |
| As I have always been told by those with experience, "Don't hold your breath, no one has ever predicted anything correctly or accurately. Go about your business and work with the market as it is". Think I'll listen to the wise man. |
|
| Above Posted By:
Jake in LJ
| Fri, 8 Jun 2007 21:06:41 EST |
| I am glad to see how resilient the housing market actually is. I am not hoping for people to lose on their biggest investment. This is still a somewhat soft correction, and over time, housing prices should increase. Look how much gas has gone up. Just imagine when gas stabilizes and goes down, the housing market could soar again.
People who want to sell their homes should be realistic in their prices right now. There are buyers out there just waiting for the fruit to pick.
Take Care.... |
|
| Above Posted By:
Rob Skidmore
| Fri, 8 Jun 2007 18:33:52 EST |
| I agree with Peter all the way to the last word! Just change that California to Georgia and we are not only on the same team but on the same base! |
|
| Above Posted By:
Ken Cook
| Fri, 8 Jun 2007 11:59:22 EST |
| The numbers are encouraging for the "bubble buyers" who predict doom and gloom of 30 % pricing decreases. The industry needs healthy correction and that is where we'll be for the next year or two! Thank you for the article and remember that we are in the greatest place in the world - USA and more specifically California. |
|
| Above Posted By:
Peter
| Fri, 8 Jun 2007 11:41:52 EST |
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