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NAR forecasts slow economic growth in 2011-12

Median price of resale homes expected to dip 3.9% this year

A monthly index that gauges pending sales of U.S. resale homes jumped 7.7 percent year-over-year in August but dipped 1.2 percent compared to July 2011, the National Association of Realtors reported today.

Also today, NAR released its latest forecast report for 2011 and 2012, revising down an earlier prediction for U.S. real gross domestic product growth. The association expects U.S. GDP growth of 1 percent in 2011 and 1.3 percent in 2012, compared to a previous forecast, released last month, that anticipated GDP growth of 1.6 percent this year and 2 percent in 2012. Actual U.S. GDP rose 3 percent in 2010, and declined 3.5 percent in 2009.

NAR’s Pending Home Sales Index, which measures real estate sales contracts signed but not yet closed, typically represents about 20 percent of all existing-home transactions. An index score of 100 is equal to the average level of sales contract activity in 2011, which was the first year examined by the trade group.

Regionally, the West led with an index score of 108.1 in August, up 10.5 percent on a year-over-year basis but down 2.4 percent compared to July, NAR reported.

The index was up 8.2 percent in the Midwest, 7.6 percent in the South, and 1.3 percent in the Northeast on a year-over-year basis in August, while falling 5.8 percent in the Northeast, 3.7 percent in the Midwest, 2.4 percent in the West and rising 2.6 percent in the South on a month-to-month basis.

In its latest economic forecast, NAR projects 4.94 million sales of resale homes this year (up 0.7 percent compared to 2010), and 5.15 million existing-home sales in 2012 (up another 4.3 percent), with the existing-home median price falling 3.9 percent this year and rising 2.9 percent in 2012.

Sales of new, single-family homes, meanwhile, are forecast to fall 5.8 percent this year, to 303,000, and to rise 25.2 percent next year, to 380,000.

NAR expects the unemployment rate to be 9 percent in 2011, and to improve to 8.7 percent in 2012 — last year’s unemployment rate was 9.6 percent.

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