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NAR: Tax-credit expiration to steal wind from real estate sales

Existing-home sales expected to rise 4.3% in 2010

The National Association of Realtors has lowered expectations for sales of U.S. resale homes in 2010, according to its latest forecast report, released Tuesday — but sales are still expected to rise this year compared to 2009.

Sales of previously owned homes are expected to rise 4.3 percent in 2010, which represents a decline from an earlier forecast of 6.5 percent, released last month April.

But NAR upped its expectations for sales of resale homes in 2011: Sales are forecast to grow 5.1 percent in 2011, vs. an earlier forecast for a 3.7 percent increase.

NAR also lowered its forecast for home-price increases, which anticipates a 2.5 percent rise this year and a 3.7 percent rise next year in the median resale home price. That compares with expectations for a 2.7 percent increase in 2010 and a 4.3 percent increase in 2011 in NAR’s previous forecast.

The latest forecast anticipates a 6.9 percent rise in new single-family home sales this year and a 42 percent rise in 2011 (compared with a previous forecast for a 0.6 percent rise this year and a 49.4 percent rise next year); and a 3.3 percent rise this year and 4.7 percent rise next year in the median price of new homes (compared to a previous forecast for a 2.7 percent rise in new-home price this year and a 5.1 percent increase in 2011).

NAR also projects that unemployment will rise from an average 9.3 percent in 2009 to 9.7 percent in 2010, dipping slightly to 9.6 percent in 2011.

NAR’s forecast calls for the 30-year mortgage rate to average 5.3 percent this year and 6 percent in 2011.

Also on Tuesday, NAR announced that its Pending Home Sales Index — a gauge of future closed home sales — rose 5.3 percent in March, and rose 21.1 percent compared to the same month last year.

Lawrence Yun, chief economist for NAR, said in a statement that the federal homebuyer tax credit (the deadline was April 30 for a home to be under contract in order for eligible homebuyers to qualify for the credit) "has helped stabilize the market."

The downside: "In the months immediately following the expiration of the tax credit, we expect measurably lower sales. Later in the second half of the year, and into 2011, home sales will likely become self-sustaining if the economy can add jobs at a respectable pace, and from a return of buyer demand as they see home values stabilizing."

Regionally, the Pending Home Sales Index — a measure of homes with signed purchase contracts but that haven’t yet closed — jumped 28.3 percent in the South, 27.2 percent in the Northeast, 18.5 percent in the Midwest and 8.8 percent in the West year-over-year in March.


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