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NAR Forecasts Gradual Recovery This Year

Existing-home sales are expected to remain flat for the next few months at an annual level of 4.9 million before beginning a gradual recovery at a 5.8-million pace in the second half of this year, NAR announced in a forecast released this morning. But total existing-home sales for 2008 are projected to be 5.38 million, 4.8 percent below the 2007 level, and rise 3.5 percent to 5.60 million in 2009. The median sale price of existing homes is projected to fall 1.2 percent to $216,300 this year, then increase 3.5 percent to $223,800 in 2009.

New-home sales are expected to drop 23.7 percent to 590,000 this year before rising 7.2 percent to 633,000 in 2009, reports NAR. Housing starts are projected to fall 25.1 percent to 1.01 million units in 2008 and slip another 2.7 percent to 987,000 in 2009. The median new-home price is expected to fall 6.1 percent to $232,200 in 2008 and rise 5.1 percent in 2009.

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contracts signed in January, remained unchanged from December, but was 19.6 percent below a year ago. The PHSI in the West jumped 13.0 percent in January, but was 12.7 percent below a year ago. The index rose 0.6 percent in the Midwest but is 13.3 percent below January 2007. The PHSI fell 4.1 percent in the Northeast and was 28.0 percent below a year ago, and it fell 6.1 percent in the South, which was 23.8 percent below January 2007.

Lawrence Yun, NAR’s chief economist, said the steady January index data gives reason for optimism. “This additional sign of a stabilizing market is encouraging, and our members are telling us there’s been a pickup in shopping activity,” he said. “Our hope is that the increased traffic of buyers looking at homes will translate soon to more contract offers.”

One thought on “NAR Forecasts Gradual Recovery This Year

  1. I hope they do consider the NHB request for a tax credit for buying this year another plus to building a new home and will help that industry also who has slowed due to lending crisis.

  2. I think this process will take till 2010 to resolve and we can analyze it to death but the fact is we lended to those we shouldn’t have. We created a false boom the economy could not move with and now those who did wrong are getting bailed out the lenders and those who take advantage of options not to foreclose. While the rest of us suffer general inflation and recession and struggle to make ends meet. But fear not we have $600 coming and for that we can pay the increase in taxes due to the false boom.

  3. I suspect a extremly slow recovery as well and hope during this time people will become less cautious and look into the possibility of homeownership at this time. Many are watching for the best time to buy and many don’t have the deposit and closing cost and are working towards saving for it.

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