Home prices may continue to fall
WASHINGTON - U.S. home prices will probably fall temporarily as the housing market corrects, the National Association of Realtors said Thursday.
Prices should bounce higher in a few months, said David Lereah, chief economist for the real estate group, "as the market works through a build in housing inventory."
Median existing-home sales prices should rise about 2.8 percent this year and 2.2 percent next year, the group said in its monthly economic outlook. Median new-home prices are expected to rise 0.2 percent in 2006 and 2.4 percent in 2007.
After adjusting for inflation, median home prices would be lower at the end of 2007 than they are now, the group projects.
Locally, the median price of existing homes in July tumbled 11 percent from July 2005, but that didn't alleviate the slump in sales.
"Buyers are sitting back waiting for the market to bottom out," said Barry Grooms, real estate agent with Re/Max Gulfstream.
Whereas last year there was more demand than supply, the numbers have now completely reversed.
"Last year we had to work all hours begging for listings," Grooms said.
The number of listings is now through the roof and it is buyers agents are struggling to find. In August, there were more than 6,500 properties for sale in Manatee County, according to the Multiple Listing Service.
Nationally, existing-home prices have risen at an average of 9.6 percent annually in the past four years, well ahead of the inflation rate. New-home prices rose 13.3 percent in 2004 and 9 percent in 2005.
"This year, sales are slowing, homes are plentiful and sellers are negotiating," Lereah said.
"Under these conditions, we'll probably see prices dip temporarily below year-ago levels as the market works through a build-up in housing inventory."
Other economists expect declines or little gain in home prices next year. Twenty-five of 48 economists surveyed in the Wall Street Journal's monthly survey said they expect little or no growth in the Office of Federal Housing Enterprise Oversight's home price index in 2007, the newspaper reported Thursday in its online edition.
The average gain in home prices predicted by the economists in the survey was 0.4 percent. The OFHEO index has never shown an annual decline in its 30-year history. The smallest gain ever was 1.3 percent in 1991.
Lereah said home prices typically appreciate at the rate of inflation, plus one or two percentage points. Buyers who plan to stay in their homes should see those gains, but "people who purchased last year with the intent of flipping are likely to get burned," he said.
From 1968 through 2000, median sales prices rose about 6.2 percent annually, while the consumer price index rose at a 5.1 percent annual rate. Consumer prices excluding shelter costs have risen 4.4 percent in the past year.
The real estate group is forecasting existing-home sales to fall 7.6 percent in 2006 and a further 1.7 percent next year. New-home sales are expected to fall 16.1 percent in 2006 and 7.1 percent in 2007.
Source: The Herald
- Herald Staff Writer
Melissa Followell contributed to this report.
Prices should bounce higher in a few months, said David Lereah, chief economist for the real estate group, "as the market works through a build in housing inventory."
Median existing-home sales prices should rise about 2.8 percent this year and 2.2 percent next year, the group said in its monthly economic outlook. Median new-home prices are expected to rise 0.2 percent in 2006 and 2.4 percent in 2007.
After adjusting for inflation, median home prices would be lower at the end of 2007 than they are now, the group projects.
Locally, the median price of existing homes in July tumbled 11 percent from July 2005, but that didn't alleviate the slump in sales.
"Buyers are sitting back waiting for the market to bottom out," said Barry Grooms, real estate agent with Re/Max Gulfstream.
Whereas last year there was more demand than supply, the numbers have now completely reversed.
"Last year we had to work all hours begging for listings," Grooms said.
The number of listings is now through the roof and it is buyers agents are struggling to find. In August, there were more than 6,500 properties for sale in Manatee County, according to the Multiple Listing Service.
Nationally, existing-home prices have risen at an average of 9.6 percent annually in the past four years, well ahead of the inflation rate. New-home prices rose 13.3 percent in 2004 and 9 percent in 2005.
"This year, sales are slowing, homes are plentiful and sellers are negotiating," Lereah said.
"Under these conditions, we'll probably see prices dip temporarily below year-ago levels as the market works through a build-up in housing inventory."
Other economists expect declines or little gain in home prices next year. Twenty-five of 48 economists surveyed in the Wall Street Journal's monthly survey said they expect little or no growth in the Office of Federal Housing Enterprise Oversight's home price index in 2007, the newspaper reported Thursday in its online edition.
The average gain in home prices predicted by the economists in the survey was 0.4 percent. The OFHEO index has never shown an annual decline in its 30-year history. The smallest gain ever was 1.3 percent in 1991.
Lereah said home prices typically appreciate at the rate of inflation, plus one or two percentage points. Buyers who plan to stay in their homes should see those gains, but "people who purchased last year with the intent of flipping are likely to get burned," he said.
From 1968 through 2000, median sales prices rose about 6.2 percent annually, while the consumer price index rose at a 5.1 percent annual rate. Consumer prices excluding shelter costs have risen 4.4 percent in the past year.
The real estate group is forecasting existing-home sales to fall 7.6 percent in 2006 and a further 1.7 percent next year. New-home sales are expected to fall 16.1 percent in 2006 and 7.1 percent in 2007.
Source: The Herald
- Herald Staff Writer
Melissa Followell contributed to this report.
posted by Dan Forbes at
4:49 PM
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