Realtors: slight slump, not bust
Industry trade group says existing home sales and prices should steady in 2007.
NEW YORK (CNNMoney.com) -- After slowing sharply in 2006, the housing market will coast along in 2007, according to a forecast released Friday by the National Association of Realtors (NAR), the industry's largest trade group.
NAR forecasts that existing home sales will fall 8.6 percent this year, to 6.47 million, still the third highest total ever. For 2007, NAR is calling for sales of 6.43 million, a decline of 0.6 percent.
New home sales, which account for about 15 percent of the housing market, are a different story. NAR expects sales of these to plummet 16.8 percent in 2006 to 1.07 million units, and another 8.7 percent next year to 975,000.
New home sales might be even worse except that sellers are offering "more competitive pricing, in addition to some favorable incentives or concessions," said David Lereah, chief economist for NAR.
Expanding inventories will depress prices in both new and existing homes but NAR is still predicting the median price of an existing, single-family home will increase 1.9 percent this year to $223,700 and 1.7 percent next year to $227,500.
New home prices should drop 1.1 percent this year to $238,400, before gaining ground next year, up 1.3 percent to $241,400.
Accounting for a portion of NAR's fairly rosy housing market forecast is their mortgage interest rate prediction; it expects rates to be very stable in 2007, with a 30-year fixed rate mortgage only inching up from 6.4 percent this autumn to 6.6 percent in the spring.
The organization also expects unemployment and inflation to be stable, which could help pave the way for housing markets to recover.