Tuesday, December 1, 2009
The National Association of Realtors is anticipating a 4.8 percent jump in sales of previously owned homes this year — which is higher than the 2 percent annual rise the group had forecast just a month ago and reverses a downward trend in the previous two years.
Also, NAR reported today that its index gauging pending sales of resale homes gained for the ninth month in a row in October and recorded a 31.8 percent gain compared to the same month last year.
The Pending Home Sales Index is based on signed contracts for home sales that have not yet closed, and is considered a leading indicator as sales are typically finalized within one or two months. A share of these pending sales, though, will not close for a variety of reasons.
In its latest forecast, NAR projects 5.15 million sales of resale homes this year, compared with 4.91 million in 2008 and 5.65 million in 2007.
The median price of resale homes is expected to be $172,700 this year, down 12.8 percent compared to 2008. The median price dropped 9.5 percent last year.
NAR anticipates that existing-home sales will rise 10.8 percent in 2010, with the median price climbing 3.6 percent.
Sales of new single-family homes will dive an estimated 18.7 percent this year — following a 37.5 percent decline in 2008 and a 26.3 percent decline in 2007 — according to the NAR forecast, with the median new-home price expected to drop 8.6 percent this year and rise 3.9 percent in 2010.
NAR expects the unemployment rate to average 9.3 percent this year and 10 percent in 2010, with real U.S. gross domestic product falling 2.5 percent this year and rising 2.6 percent in 2010.
Lawrence Yun, NAR’s chief economist, said in a statement that a homebuyers tax credit program, which Congress has extended and expanded, “is helping unleash a pent-up demand from a large pool of financially qualified renters,” though he said that home sales could decline in the coming months.
Yun cited a “lag time” between the recent availability of the expanded credit and the several months it can take for buyers to close a sale as potentially causing “a temporary decline in closed existing-home sales from December until early spring when we get another surge.”
He added, “the weak job market remains a major concern and could slow the recovery process.”
The Pending Home Sales Index, at 114.1 in October, was up 3.7 percent compared to September and up 31.8 percent compared to October 2008. An index score of 100 matches the average level of contract activity recorded in 2001, which was the first of five straight record years for sales of resale homes.
Regionally, the index grew 19.9 percent in the Northeast, 11.6 percent in the Midwest and 5.4 percent in the South while falling 11.2 percent in the West.
In a separate announcement today, the U.S. Census Bureau and Commerce Department reported that the rate of private residential construction spending climbed 4.4 percent from September to October but was down 23.6 percent year-over-year in October.
The seasonally adjusted annual rate of U.S. private construction spending was $327.7 billion in October, while the rate of total construction spending was $1.06 trillion — flat compared to September and down 14.4 percent compared to October 2008, the agencies reported. This rate is a projection of a monthly total over a 12-month period, adjusted to account for seasonal fluctuations in construction activity.