The 2008 predictions begin
It's not even Halloween and already industry experts are predicting the direction for the housing market next year.
The Mortgage Bankers Association says the housing slump will extend to the third quarter of next year and possibly into 2009. Maybe it's a good thing that any forecast includes a bottom. He says that existing home sales for 2007 will be about 5.72 million units for a 12 percent decline from 2006, and that existing home sales will slump 10 percent further before they pick up by five percent in 2009.
New home sales will be down 22 percent from 2006 to a total of 819,000 units and will soften 10 percent further in 2008. Things look brighter in 2009 with an expected rise in sales of six percent. For the first time national median home prices will decline two percent in successive years in 2007 and 2008 before going flat in 2009.
On the bright side, Duncan doesn't expect mortgage interest rates to go up much higher. A conforming 30-year loan today is about 6.4 percent and will climb to 6.6 percent by early 2008. It's a large "overhang" of inventory, coupled with tighter lending standards that are the cause of the continuing slump, he says.
To the rescue, the National Association of Home Builders Chief Economist David Seiders says that new home construction is at a 14-year low. "While there's no question that the housing down swing continues to be played out in markets across the country, today's numbers show that builders are pulling back on production until sales improve," says Seiders, "This is exactly what our latest builder surveys have told us. We do expect some additional downward movement in housing production going into next year, at which point starts should begin to stabilize as sales turn upward in the second quarter."
According to the U.S. Census housing starts in September were at a seasonally adjusted rate of 1,191,000 annually, over 10 percent below the revised August estimate of 1,327,000 and 30.8 percent below September 2006. New home completions are 31.1 percent below September 2006 at 1,391,000, including multi-family units.
Consequently, the builders' confidence index reached an all-time low of 18, meaning one in six builders feel conditions are favorable. The one in six must be on vacation in Hawaii.
While the National Association of Realtors forecasts similar slow rises in mortgage interest rates to the MBAA, the trade organization is more optimistic about home prices. Existing-home prices will probably slip 1.3 percent to a median of $219,000 in 2007 before rising 1.3 percent next year to $221,800, while the median new-home price should drop 2.1 percent to $241,400 this year, and then increase 1.0 percent in 2008 to $243,900.
The Mortgage Bankers Association says the housing slump will extend to the third quarter of next year and possibly into 2009. Maybe it's a good thing that any forecast includes a bottom. He says that existing home sales for 2007 will be about 5.72 million units for a 12 percent decline from 2006, and that existing home sales will slump 10 percent further before they pick up by five percent in 2009.
New home sales will be down 22 percent from 2006 to a total of 819,000 units and will soften 10 percent further in 2008. Things look brighter in 2009 with an expected rise in sales of six percent. For the first time national median home prices will decline two percent in successive years in 2007 and 2008 before going flat in 2009.
On the bright side, Duncan doesn't expect mortgage interest rates to go up much higher. A conforming 30-year loan today is about 6.4 percent and will climb to 6.6 percent by early 2008. It's a large "overhang" of inventory, coupled with tighter lending standards that are the cause of the continuing slump, he says.
To the rescue, the National Association of Home Builders Chief Economist David Seiders says that new home construction is at a 14-year low. "While there's no question that the housing down swing continues to be played out in markets across the country, today's numbers show that builders are pulling back on production until sales improve," says Seiders, "This is exactly what our latest builder surveys have told us. We do expect some additional downward movement in housing production going into next year, at which point starts should begin to stabilize as sales turn upward in the second quarter."
According to the U.S. Census housing starts in September were at a seasonally adjusted rate of 1,191,000 annually, over 10 percent below the revised August estimate of 1,327,000 and 30.8 percent below September 2006. New home completions are 31.1 percent below September 2006 at 1,391,000, including multi-family units.
Consequently, the builders' confidence index reached an all-time low of 18, meaning one in six builders feel conditions are favorable. The one in six must be on vacation in Hawaii.
While the National Association of Realtors forecasts similar slow rises in mortgage interest rates to the MBAA, the trade organization is more optimistic about home prices. Existing-home prices will probably slip 1.3 percent to a median of $219,000 in 2007 before rising 1.3 percent next year to $221,800, while the median new-home price should drop 2.1 percent to $241,400 this year, and then increase 1.0 percent in 2008 to $243,900.
posted by Ken Calhoon at 8:24 AM
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