WASHINGTON, D.C. (MCT) - A recovery in the nation's housing market is "likely" this year, though problems in the subprime lending marketplace and unusual weather have posed challenges in assessing conditions, according to a Tuesday forecast from the National Association of Realtors.
Total sales this year will be "fairly close" to the prior year because "last year started high and ended low," said David Lereah, NAR's chief economist, in a statement.
Existing-home sales for 2007 are projected at 6.42 million, improving to 6.66 million in 2008. These figures compare with a total of 6.48 million existing homes sold last year.
"Although existing-home sales will be marginally reduced due to subprime lending restrictions, they should be gradually rising this year and next," Lereah said.
Lereah said winter storms last month, the coldest February since 1979, "brought markets to a halt" in much of the country, adding that sales should be dragged down in March. There may not be an upturn in closed transactions before May 25, when NAR is scheduled to report sales for April.
"Lending problems in our nation's subprime marketplace are building, which could inhibit future housing activity and further dampen our forecast," Lereah said. "Even so, these problems are likely to be contained and not spill over into the prime mortgage market."
There will be "some additional pain" in the new-home market, though existing-home sales are expected to "slowly improve" from a cyclical low last fall, Lereah said. NAR now forecasts new-home sales at 950,000 in 2007, followed by 981,000 next year. A total of 1.06 million new homes were sold in 2006.
The national median existing-home price is projected to rise 1.2 percent to $224,500 this year, higher than the 1 percent gain seen in 2006, according to NAR.
The median new-home price should grow 1.7 percent to $249,600 in 2007, following on a 1.9 percent increase last year, according to NAR.
As for 2008, NAR expects existing-home prices to rise 3.1 percent and new-home prices to grow 3 percent.
(c) 2007, MarketWatch.com Inc. Distributed by McClatchy-Tribune Information Services.
