to Recover in 2008
The latest economic forecast by the NATIONAL ASSOCIATION OF REALTORS® shows
home prices recovering in 2008 as housing inventory falls from current levels.
"Buyers now have an overwhelming advantage given the wide selection of homes
available in many markets," says Lawrence Yun, NAR senior economist. "But with
profit margins coming under pressure, homebuilders will limit new construction
well into 2008. This should help the overall inventory level to move steadily
into a more balanced state."
NAR says existing-home sales will begin picking up late this year, rising to a
total of 6.11 million for 2007 and 6.37 million in 2008. Those numbers are both
lower than last year's 6.48 million.
Meanwhile, new-home sales are projected to reach 865,000 in 2007 and rise to
878,000 next year, compared with 1.05 million in 2006. Housing starts, including
multifamily units, are forecast at 1.43 million units this year and 1.44 million
in 2008, down from 1.8 million last year.
Prices Expected to Rise for New, Existing Homes
Existing-home prices are likely to rise 1.8 percent to a median of $222,700 in
2008 after a 1.4 percent decline this year to $218,800.
The median new-home price should rise 2.2 percent to $245,400 next year
following a 2.6 percent drop in 2007 to $240,100.
"Markets that sharply reduce new construction in 2007 will generally experience
respectable price increases in 2008," Yun says. "Local conditions vary
considerably, but with historically low mortgage interest rates this summer and
sustained job gains, it could be a good time for first-time buyers with a
long-term view to test the housing waters."
Other Predictions: Mortgage Rates, Jobs, GDP
The 30-year fixed-rate mortgage is estimated to average 6.7 percent during the
second half of this year, and fluctuate around 6.6 percent in 2008.
Growth in the U.S. gross domestic product (GDP) will probably be 2 percent in
2007, compared with a 3.3 percent growth rate last year; GDP is forecast to grow
2.8 percent in 2008.
The unemployment rate is likely to average 4.6 percent in 2007, unchanged from
last year. Inflation, as measured by the Consumer Price Index, is projected at
2.6 percent in 2007, down from 3.2 percent last year. Inflation-adjusted
disposable personal income should rise 3 percent this year, up from a 2.6
percent gain in 2006.