Existing-home sales are expected to drop 5.7 percent this year, with the median existing-home price falling 1.4 percent to $218,800, the National Association of Realtors reported today in its latest forecast.
And new single-family sales are expected to drop 17.7 percent this year after an 18.1 percent drop in 2006, with the median price of new homes dropping 2.6 percent this year to $240,100.
The forecast anticipates six consecutive quarters of year-over-year existing-home median-price declines to end in the first quarter of 2008, with median existing-home prices growing 1.8 percent for the full year in 2008 compared to 2007. New-home prices are expected to rise 2.2 percent in 2008.
The numbers represent a slight adjustment from the association’s last forecast in June, which projected a 4.6 percent decline in existing-home sales and an 18.2 percent decline in new single-family home sales this year compared to last year, and for existing-home prices to fall 1.3 percent and new-home prices to fall 2.3 percent compared to last year.
The association’s forecast released today calls for 6.11 million existing-home sales this year, compared with 6.48 million last year. There are 865,000 new-home sales projected this year, compared with 1.05 million in 2006.
Housing starts are projected to drop 20.6 percent this year to 1.43 million compared with 1.8 million in 2006, with single-family starts dropping 23.3 percent and multifamily starts dropping 8.8 percent. Housing starts are expected to rise 0.6 percent in 2008 compared to 2007, with single-family starts declining 1.3 percent and multifamily starts rising 7.6 percent.
The rate for a 30-year fixed mortgage is expected to be 6.5 percent for 2007, up from 6.4 in 2006, and to climb to 6.6 percent in 2008. The association expects the federal funds rate to average 5.3 percent in 2007, up from 5 percent in 2006, and to fall to 4.9 percent in 2008.
Growth in the U.S. gross domestic product is projected at 2 percent in 2007, compared with a 3.3 percent growth rate last year, and GDP is forecast to grow 2.8 percent in 2008.
The unemployment rate is expected to average 4.6 percent in 2007, unchanged from last year, according to the NAR forecast, and to rise slightly to 4.7 percent in 2008.
Inflation, as measured by the Consumer Price Index, is projected at 2.6 percent in 2007, down from 3.2 percent last year, and is expected to lower to 2.4 percent in 2008. Inflation-adjusted disposable personal income is projected to rise 3 percent this year, up from a 2.6 percent gain in 2006, according to the report.