Posted by nick_niesen in Finance on November 8th, 2010
The five-year boom in existing and new housing sales in many U.S. housing markets is expected to cool in 2006 but final results should still be second best in history Andrei Vasilevskiy Jersey , according to projections by top industry economists. National average home price appreciation is also expected to slow from an unsustainable rate of 12.7% this year to about 5.0% next year.
Existing home sales, increasing 4.8% this year to a record 7.11 million, are projected to decline 3.5% to 6.86 million in 2006. New home sales will increase 8.0% to 1.3 million this year and are expected to decline 4.6% to 1.97 million next year.
We are in the process of setting a fifth consecutive annual record for both existing and new home sales, said David Lereah Victor Hedman Jersey , chief economist for the National Association of Realtors (NAR). The market will be coming off a five-year boom and will experience a soft landing next year. An uptrend in mortgage interest rates will cause some slowing of the sales pace but we forecast 2006 to be the second highest year on record. Housing will continue to support the overall economy. The market is entering a period of transition in which we will see a somewhat slower but more sustainable pace of home sales. This will create a better balance between home buyers and sellers.
HouseHunts national Current Market Conditions survey, taken in the third quarter of this year, is in concert with the latest industry projections. It found that the current housing market momentum is being fueled by unprecedented buyer demand, strong sales and price appreciation Louis Domingue Jersey , strong job and population growth and relatively low mortgage rates.
The survey also found that its taking a bit longer for homes to sell and that the inventory of unsold homes appears to be building in all but the most active markets. Another significant indicator of market strength is that 80% of home sellers are getting 95-100% of asking prices.
Lereah noted: Baby boomers remain in their peak earning years and their children, the echo boomers, are just entering the period of life when people typically buy their first home. His primary concerns about an otherwise rosy market outlook were the emergence of exotic, interest-only mortgage loans and the threat of the home mortgage interest deduction being eliminated or diluted by tax reform legislation in Congress.
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The Pending Home Sales Index Jake Dotchin Jersey , a leading indicator of future home sales, eased slightly to a reading of 128.8 in September but is still at its second highest level since its inception. An index of 100 is equal to the average level of contract activity during 2001, according to NAR.
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