Home sales are expected to decline modestly throughout the rest of the year as the market continues to show signs of stabilizing, the National Association of Realtors said today.
Existing-home sales are expected to decline 6.7 percent to 6.6 million in 2006 from 7.08 million last year, and new-home sales should fall 12.8 percent this year to 1.12 million from 1.28 million in 2005. Housing starts are forecast to decline 6.8 percent to 1.93 million this year from 2.07 million in 2005.
David Lereah, NAR’s chief economist, said the market is showing signs of stabilizing.
“The major housing indicators have been moving up and down within a reasonable range, which means the market should even-out just below present levels,” said David Lereah, NAR’s chief economist. “At the same time, housing inventory levels are balanced in much of the country, so overall price appreciation will be at a normal rate. We should see home sales rise and fall month to month, but don’t look for any big shifts one way or the other.”
The 30-year fixed-rate mortgage is likely to reach 7 percent by the end of the year, the trade group said.
“The uptick in interest rates has been slowing home sales,” Lereah said. “We remain concerned about the potential impact of higher interest rates in some of the more expensive areas of the country.”
The national median existing-home price for all housing types is expected to rise 5.3 percent to $231,300 in 2006. With more construction in lower-cost regions, as well as price incentives that are helping to clear unsold inventory, the median new-home price should increase 1 percent this year to $243,300, according to NAR.
The unemployment rate is projected to average 4.7 percent in 2006, while inflation, as measured by the Consumer Price Index, is forecast at 3.4 percent. Growth in the U.S. gross domestic product is expected to be 3.4 percent this year, and inflation-adjusted disposable personal income is likely to grow 3.1 percent.