National Expert's Market Report, Part 1

Most consumers are concerned about understanding our changing real estate market and what that might mean for a potential purchase or sale. One of the top real estate economists shares his insights in an article posted on the National Association of Realtors website, and I am providing that article for your review in two parts. The second half of the article will be posted next week.


Home Prices Correcting, Buyers Returning to the Market
WASHINGTON, October 11, 2006 - Home sales appear to be bottoming out with lower home prices attracting buyers in many areas of the country, according to the National Association of Realtors.

David Lereah, NAR’s chief economist, said the housing market is showing signs of life and that sales may be leveling out. “Many potential home buyers who have been taking a wait-and-see attitude or taking their time and being methodical in the search process are being enticed by lower home prices,” he said. “Given a positive economic backdrop of lower interest rates and job creation, we expect sales activity to pick up early next year.”

Existing-home sales are forecast to be fairly stable in the fourth quarter and sales for all of 2006 are expected to drop 8.9 percent to 6.45 million – still the third strongest year after consecutive records in 2004 and 2005. New-home sales are forecast to fall 17.3 percent this year to 1.06 million, the fourth highest year on record. Housing starts should be down 10.9 percent to 1.84 million in 2006.
With a recent correction in the market, the national median existing-home price is likely to rise 1.6 percent to $223,000 for all of 2006; it’s anticipated prices will remain slightly below year-ago levels before gaining positive traction in the first quarter of 2007. The median new-home price is projected to decline 0.2 percent to $240,500 – largely the result of builder price cuts to move unsold inventory.