Housing forecast changed slightly due to impact from tighter lendingMortgagePress.comNational Association of Realtors, sub-prime, abnormal price growth, existing-home sales
Housing activity this year will be somewhat lower than in
earlier forecasts, with clearer analysis of the effects of stricter
lending standards and a decline in sub-prime mortgage origination,
according to the latest projections by the National Association of Realtors
(NAR).
Lawrence Yun, NAR senior economist, said one benefit for the
market is the disappearance of speculative behavior, which
contributed to abnormal price growth. "Homebuyers today are
purchasing for the long-term, generally with a realistic
expectation of modest gains over time," Yun said.
"Housing first and foremost is shelter. Second, it's a long-term
investment that slowly builds the greatest amount of wealth for
most families. It's good that we're getting beyond the tendency of
some buyers to view housing as a temporary asset to accumulate
short-term wealth, which is not to be expected in a normal
market."
Existing-home sales are likely to total 6.29 million this year
and 6.49 million in 2008, compared with 6.48 million last year.
New-home sales are projected at 864,000 in 2007 and 936,000 next
year, lower than the 1.05 million in 2006. Housing starts should
total 1.46 million units this year and 1.52 million in 2008, down
from 1.8 million last year.
"If it weren't for a favorable economic backdrop, housing would
probably have a hard landing. As it is, we see this as a soft
landing with home sales rising gradually in the second half of the
year and prices recovering a bit later," Yun said.
The 30-year fixed-rate mortgage should rise slowly to 6.5
percent by the fourth quarter. Recently, Freddie Mac reported the
30-year rate was 6.16 percent.
The national median existing-home price is forecast to slip one
percent to $219,800 this year, and then rise 1.4 percent in 2008.
The median new-home price is expected to be essentially unchanged
at $246,400 in 2007, and then rise 2.2 percent next year. The
unemployment rate will probably average 4.6 percent this year,
unchanged from 2006. Inflation, as measured by the Consumer Price
Index, is estimated to decline to 2.5 percent in 2007, down from
3.2 percent last year, while growth in the U.S. gross domestic
product is projected at 2.1 percent in 2007, lower than the 3.3
percent growth last year. Inflation-adjusted disposable personal
income should rise 2.6 percent in 2007, the same as last year.
For more information, visit www.realtor.org.
