The National Association of Realtors has lowered its expectations for resale home prices in its latest forecast, which anticipates a 2.4 percent price drop this year.
The median price of resale homes is expected to be $213,700 this year and the median new-home price is expected to fall 3.7 percent to $238,000.
In its previous forecast released last month, the Realtor trade group had anticipated a resale median price drop of 1.4 percent and a new-home price decline of 3.6 percent in 2008 compared to 2007.
Single-family housing starts are expected to decline 37.5 percent this year, while the group expects new single-family sales to fall 30.9 percent and resale home sales to fall 4.7 percent this year compared to last year.
The forecast report calls for 5.39 million resale home sales this year and 5.72 million in 2009. The group also anticipates 536,000 new single-family home sales this year, down from 775,000 in 2007, and a rise to 590,000 sales in 2009.
New single-family housing starts are expected to drop from 1.05 million units in 2007 to 653,000 units this year, and to remain roughly flat in 2009. Multifamily housing starts are expected to decline 2.4 percent this year and rise 4.4 percent in 2009.
Unemployment is projected to increase this year — the Realtor group’s forecast anticipates a 5.3 percent unemployment rate this year and a 5.5 percent rate in 2009 compared to a rate of 4.6 percent in 2006 and 2007.
Growth in the U.S. gross domestic product is expected to be 1.5 percent this year and 2.3 percent in 2009, compared with 2.2 percent last year. And inflation, as measured by the Consumer Price Index, is projected at 3.4 percent this year and 2.2 percent in 2009, compared with 2.9 percent in 2007. Inflation-adjusted disposable personal income is forecast to grow 1.2 percent in 2008 and 3 percent next year, according to the forecast.
Consumer confidence, which was at a level of 106 in 2006 and 103 last year, is expected to decline sharply to 73 this year and reach 83 in 2009.
The 30-year fixed mortgage rate is projected to average 6.1 percent this year and to match last year’s rate of 6.3 percent in 2009.
Lawrence Yun, chief economist for the Realtor group, said in a statement that the "availability of affordable mortgages is uneven around the country and sometimes within metropolitan areas," and "some time is needed for FHA and new conforming jumbo loans to become widely available."
NAR reported a record low in an index report that gauges pending sales of resale homes. That index, which is based on home-purchase contracts signed in March, fell 20.1 percent year-over-year in March, to a rating of 83.
The previous low was set last month, when the index dropped to 83.8. An index score of 100 is equal to the average level of contract activity in 2001, which was the first year to be examined for the index and the first of five consecutive record years in sales of resale homes.
Regionally, the index dropped 26.7 percent in the South, 22.3 percent in the Midwest, 15.4 percent in the Northeast and 9.5 percent in the West in April compared to the same month last year.
The next forecast and Pending Home Sales Index report is scheduled for release on June 9, and the resale home sales report for April is scheduled for release on May 23.
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