WASHINGTON (February 7, 2006) – Home sales this year are
expected to stay below the peak levels in 2005 but will remain
historically strong, according to the National Association of
Realtors®.
David Lereah, NAR’s chief economist, said the sales slowdown
has already occurred. “Right now, home sales are a little
lower than projected, but they can be sustained around current
levels,” Lereah said. “Sometimes people lose sight
of the fact that real estate is cyclical. Even so, sales will
continue at a historically high pace with modestly higher interest
rates as the year progresses, and 2006 is forecast to be the
third strongest year on record.”
Existing-home sales are likely to decline 4.7 percent to 6.74
million this year, down from a record 7.07 million units in 2005,
while new-home sales are expected to fall 8.5 percent to 1.17
million from a record 1.28 million in 2005; both sectors would
see their third best year after the totals for 2005 and 2004.
Housing starts are seen at 1.87 million units in 2006, down 9.3
percent from 2.06 million last year.
The 30-year fixed-rate mortgage should rise to 6.9 percent by
the end of the year.
NAR President Thomas M. Stevens
from Vienna, Va., said home sellers are making some adjustments. “It’s easy to
understand that sellers have taken it for granted that it would
be fairly easy to sell without much compromise during the recent
sales boom,” said Stevens, senior vice president of NRT
Inc. “Now that buyers have more choices, it’s even
more important for sellers to seek advice from real estate professionals.
Pros can recommend the right mix of improvements to maximize
return, as well as bridge the differences between buyers and
sellers that often arise in the negotiation process. Consumers
should keep in mind that not all real estate agents are Realtors®,
who subscribe to a strict Code of Ethics.”
The national median existing-home price for all housing types
is expected to increase 5.0 percent this year to $219,200. At
the same time, the median new-home price is projected to rise
5.7 percent to $250,900.
Inflation as measured by the Consumer Price Index is forecast
at 3.1 percent in 2006. Inflation-adjusted disposable personal
income is likely to grow 3.9 percent this year.
Growth in the U.S. gross domestic product is seen at 3.4 percent
in 2006. The unemployment rate should average 4.8 percent this
year.
The National Association of Realtors®, “The Voice
for Real Estate,” is America’s largest trade association,
representing more than 1.2 million members involved in all
aspects of the residential and commercial real estate industries.
# # #
SPECIAL NOTICE: Minor revisions to monthly seasonally adjusted
annual sales rates for 2002 through 2004 will be made when the
January existing-home sales report is released on February 28.
Each February, NAR Research incorporates a review of seasonal
activity factors and fine-tunes historic data for the past three
years based on the most recent findings.
Additionally, within the next two months, NAR will revise national
and regional median existing-home price data back to 1999. The
fixed reporting sample of representative multiple listing services
has been updated to reflect geographic changes over time so that
the monthly samples for regional price measurements are as accurate
as possible. The changes in price patterns will be consistent
with previously reported data.
Existing-home sales data for January will be released February
28; the next forecast is scheduled for March 13, and the Pending
Home Sales Index will be March 6.
