NAR ups forecast for US economic growth

By Inman News, Thursday, October 27, 2011

A monthly index that tracks pending sales of U.S. resale homes rose in September compared to a year ago, while falling on a month-to-month basis, the National Association of Realtors reported today.

Also today, NAR released its latest forecast report for 2011 and 2012, revising up an earlier prediction for U.S. real gross domestic product growth in the wake of third-quarter GDP data released today.

Third-quarter data showed a 2.5 percent rise in GDP, compared with 1.3 percent in the second quarter. NAR expects U.S. GDP growth of 1.8 percent for the full year in 2011, with 2.3 percent GDP growth in 2012. A previous NAR forecast, released last month, anticipated U.S. GDP growth of 1 percent this year and 1.3 percent in 2012. Actual U.S. GDP rose 3 percent in 2010 and declined 3.5 percent in 2009.

NAR’s Pending Home Sales Index, which measures real estate sales contracts signed but not yet closed, increased 6.4 percent year over year, to 84.5, in September. On a monthly basis, the index declined 4.6 percent. The index typically represents about 20 percent of all existing-home transactions. An index score of 100 is equal to the average level of sales contract activity in 2001, which was the first year examined by the trade group.

The index rose on an annual basis in all four U.S. regions. The Midwest saw the greatest increase, up 12.3 percent to 71.5. The region also saw the greatest month-to-month index decline, down 6.2 percent.

In the West, the index jumped 5.6 percent on a year-over-year basis in September, to 105.8 — the highest index value of any region. The region also saw the smallest monthly index drop, down 2.1 percent.

In the South, the index rose 5 percent year over year, to 91.6. On a month-to-month basis, the index slipped 5.5 percent in the region.

The Northeast saw a 4 percent index increase compared to a year ago, to 60.6, and a monthly decline of 4.7 percent.

In its latest economic forecast, NAR projects 4.955 million sales of resale homes this year (up 1 percent compared to 2010), and 5.169 million existing-home sales in 2012 (up another 4.3 percent), with the existing-home median price falling 4 percent this year, to $165,900, and rising 2.6 percent in 2012.

Sales of new, single-family homes, meanwhile, are forecast to fall 4.7 percent this year, to 307,000, and to rise 21.3 percent next year, to 372,000. The median price of a new home is projected to rise 1.8 percent this year, to $225,000, and jump 3.5 percent in 2012.

The interest rate for a 30-year fixed-rate mortgage is not expected to change much. The rate was 4.7 percent in 2010, and NAR forecasts a rate of 4.5 percent for the full year in 2011, and 4.7 percent in 2012.

NAR forecasts the unemployment rate to average 9 percent in 2011, and to improve to 8.7 percent in 2012; last year’s unemployment rate was 9.6 percent.