Industry News

Fannie Mae forecasts 10% drop in 2006 home sales

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The number of homes changing hands in 2006 could decline by up to 10 percent, and mortgage originations could fall by 18 percent to $2.41 trillion, the top economists at Fannie Mae project. In a report issued Wednesday, Fannie Mae economists David Berson and Molly Boesel said a weakening investor demand and a lack of affordability could bring sales volume down 8 percent to 10 percent this year, to 7.61 million units. That would still be the third-best year ever for home sales, the report notes. "The surge in the number of immigrants over the past 25 years, the age-structure of the population, and continued job and income growth as the overall economy grows around trend rates should partially offset the drop in sales related to affordability and investors," the report said. The falloff in sales will be most pronounced in areas with weak economies and where the falloff in investor demand creates a large increase in the supply of homes for sale. Home prices could fall in those ...