NAR: Home prices to drop 8.3% in '08

Sales of U.S. resale homes are projected to fall 10.9 percent this year compared to 2007, with the median price dropping 8.3 percent, according to the latest National Association of Realtors forecast.

That forecast has been revised downward several times during the course of the year in response to the nation's economic downturn -- back in January, the group has predicted that sales of resale homes would rise slightly this year and that prices would hold steady compared to 2007.

The sales projection has actually been revised upward since the group's previous forecast, released last month, which anticipated an 11.4 percent year-over-year drop in sales. NAR's previous forecast called for the median price of resale homes to fall 7 percent this year, which is less than the drop anticipated in the forecast released today.

The anticipated drop to 5.04 million sales of resale homes this year would be the third straight year of decline -- sales dropped 12.8 percent in 2007 and 8.5 percent in 2006. NAR expects that sales of resale homes will rebound next year, rising 7.5 percent.

New single-family housing starts are expected to fall 36.9 percent this year to 660,000 starts and another 18.1 percent in 2009, following a 28.6 percent decline in 2007 and a 14.6 percent decline in 2006.

New single-family sales, meanwhile, are expected to drop 28.2 percent this year to 503,000 and to drop another 6.2 percent in 2009, following drops of 26.3 percent in 2007 and 18.1 percent in 2006.

The median resale home price is expected to be $200,700 in 2008 and to rise 2.8 percent next year, while the median new-home price is expected to drop 5.1 percent this year to $234,500 and to rise 2.6 percent next year.

Consumer confidence is expected to be 64 this year and 73 in 2009, a substantial drop from 103 in 2007. Unemployment is expected to rise to 5.7 percent this year and to reach 6.6 in 2009.

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