Sales of existing homes are expected to fall 8.9 percent nationwide to 6.45 million in 2006, and sales of new homes are forecast to plunge 17.3 percent to 1.06 million this year, according to a statement from an industry trade group this week.
Housing starts are expected to fall 10.9 percent to 1.84 million in 2006, the National Association of Realtors said in an announcement, and the national median existing-home price is likely to rise 1.6 percent to $223,000.
NAR said it expects prices to remain slightly below year-ago levels before gaining positive traction in the first quarter of 2007. The median new-home price is projected to decline 0.2 percent to $240,500 — largely the result of builder price cuts to move unsold inventory.
NAR’s expectations are less bleak than a housing report released by Moody’s Economy.com last week that predicts that the median sale price for existing homes will fall 3.6 percent in 2007. Moody’s report projects a drop in home prices in more than 100 metropolitan areas, with the hardest-hit areas in California, Florida and the Northeast.
NAR expects rates on the 30-year fixed-rate mortgage to average 6.5 percent in the fourth quarter and trend up modestly in 2007.
The unemployment rate is forecast to average 4.8 percent in the fourth quarter, according to NAR’s predictions, and inflation, as measured by the Consumer Price Index, is expected to be 3.4 percent for all of 2006, while growth in the U.S. gross domestic product is forecast at 3.3 percent. Inflation-adjusted disposable personal income is likely to grow 3.4 percent for 2006.
NAR’s September existing-home sales report will be released Oct. 25.
