Real Estate

WASHINGTON, May 7 /PRNewswire-USNewswire/ — A flat pattern in home
sales activity should continue for the next couple months before improving
over the summer, according to the latest forecast by the National
Association of Realtors(R).



Lawrence Yun, NAR chief economist, said the extent of an expected
recovery hinges on better access to affordable loans. “Things are beginning
to improve, but the availability of affordable mortgages is uneven around
the country and sometimes within metropolitan areas,” he said. “As
anticipated, we continue to look for a soft first half of the year, for
both housing and the economy, before notable improvements in the second
half. Some time is needed for FHA and new conforming jumbo loans to become
widely available.”



The Pending Home Sales Index,* a forward-looking indicator based on
contracts signed in March, edged down 1.0 percent to 83.0 from a downwardly
revised level of 83.8 in February, and was 20.1 percent lower than the
March 2007 index of 103.9.



NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate
Specialists in Long Beach, Calif., said additional costs in many markets
are hindering a recovery. “Our members are telling us that more buyers are
looking at homes but are slow in signing contracts, and that’s contributing
to the weakness in pending home sales,” he said. “In many cases buyers are
waiting for greater access to affordable credit, especially in higher cost
areas, but some are disappointed with what appears to be unnecessarily
restrictive lending requirements. The good news this week is there is some
discussion toward relaxing some of the burdensome lending practices.”



The PHSI in the Northeast jumped 12.5 percent in March to 80.8 but
remains 15.4 percent below a year ago. In the South, the index slipped 0.1
percent to 84.9 and is 26.7 percent lower than March 2007. The index in the
West declined 1.4 percent in March to 91.2 and is 9.5 percent below a year
ago. In the Midwest, the index fell 10.4 percent in March to 74.1 and is
22.3 percent below March 2007.



Existing-home sales are projected to rise from an annual pace of 4.95
million in the first quarter to 5.82 million in the fourth quarter. For all
of 2008, existing-home sales are likely to total 5.39 million, and then
rise 6.1 percent to 5.72 million next year. “Although more than half of
local markets are expected to see price growth this year, the aggregate
existing-home price will decline 2.4 percent in 2008, driven by a
relatively few markets that are very oversupplied,” Yun said. The median
price is forecast at

13,700 this year before rising 4.1 percent to

22,600 in 2009.



Some areas already are seeing sales increases, underscoring that all
real estate is local. In March, unpublished snapshot data shows sales in
Bakersfield, Calif., and Jackson, Miss., were higher than a year ago. At
the same time, price gains were noted in markets such as Buffalo-Niagara
Falls, and Cedar Rapids, Iowa. On May 13, NAR will report first-quarter
data on metropolitan area home prices, covering about 150 metro areas, and
state home sales.



“Although some market adjustments are necessary, a downward
overshooting of the housing market would cause unnecessary loss in economic
output, income and jobs,” Yun said. “It is critical to stimulate housing
demand by inducing fence sitters back into the market. A home buyer tax
credit on any home purchase would accomplish that.”



New-home sales are expected to fall 30.9 percent to 536,000 this year
before rising 10.1 percent to 590,000 in 2009. Housing starts, including
multifamily units, will probably drop 29.5 percent to 955,000 in 2008, and
then rise 1.3 percent to 967,000 next year. The median new-home price is
estimated to fall 3.7 percent to

38,000 this year, and then rise 5.4
percent in 2009 to

50,900.



The 30-year fixed-rate mortgage is likely to rise gradually to 6.2
percent by the end of the year, and then average 6.3 percent in 2009. NAR’s
housing affordability index is expected to rise 10 percentage points to
127.0 for all of 2008.



Growth in the U.S. gross domestic product (GDP) should be 1.5 percent
this year and 2.3 percent in 2009. The unemployment rate is projected to
average 5.3 percent in 2008 and 5.5 percent next year.



Inflation, as measured by the Consumer Price Index, is seen at 3.4
percent this year and 2.2 percent in 2009. Inflation-adjusted disposable
personal income is forecast to grow 1.2 percent in 2008 and 3.0 percent
next year.



The National Association of Realtors(R), “The Voice for Real Estate,”
is America’s largest trade association, representing 1.2 million members
involved in all aspects of the residential and commercial real estate
industries.



*The Pending Home Sales Index is a leading indicator for the housing
sector, based on pending sales of existing homes. A sale is listed as
pending when the contract has been signed but the transaction has not
closed, though the sale usually is finalized within one or two months of
signing.



The index is based on a large national sample, typically representing
about 20 percent of transactions for existing-home sales. In developing the
model for the index, it was demonstrated that the level of monthly
sales-contract activity from 2001 through 2004 parallels the level of
closed existing-home sales in the following two months. There is a closer
relationship between annual index changes (from the same month a year
earlier) and year-ago changes in sales performance than with month-to-month
comparisons.



An index of 100 is equal to the average level of contract activity
during 2001, which was the first year to be examined as well as the first
of five consecutive record years for existing-home sales.



Existing-home sales for April will be released May 23; the next
Forecast / Pending Home Sales Index will be released June 9.



Information about NAR is available at http://www.realtor.org. This and other
news releases are posted in the News Media section. Statistical data,
tables and surveys also may be found by clicking on Research.







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Source: Real Estate Newswire