Realtors predict gradual rise in home sales in 2007

While NAR has not yet released final figures for 2006, new-home sales are expected to come in at about 1.06 million, and existing-home sales at about 6.5 million, which would be the third-highest number on record.

For 2007, NAR projects 957,000 new-home sales and 6.42 million existing-home sales, as well as 1.51 million housing starts for the year. While that’s the lowest level of housing starts in a decade, NAR says builders are pulling back on new construction to support prices of existing inventory.

Year-to-year comparisons

NAR Chief Economist David Lereah expects annual totals for existing-home sales to be similar for 2006 and 2007; NAR will release existing-home sales data for December on Jan. 25.

“We have to keep in mind that we were still in boom conditions during the first quarter of 2006 with a high sales volume and double-digit price appreciation,” he said in a news release. “We are starting 2007 from a relatively low point, so even with a gradual improvement in sales it’ll be pretty much of a wash in terms of annual totals. The good news is that the steady improvement in sales will support price appreciation moving forward.”

The 30-year fixed-rate mortgage will likely rise in the fourth quarter of this year, Lereah said.

“The current interest rate environment and housing inventory levels present a window of opportunity for potential buyers,” he added.

Home prices

The national median new-home price is expected to increase to $248,900, a 3 percent increase compared to 2006, and the median existing-home price is expected to increase 1.5 percent to $225,300.

While academics and financial analysts have made many wild projections, Lereah said, indications are that the housing sector is in the midst of a soft landing, rather than a drastic decline.

“Despite the doomsayers, household wealth will not evaporate and the economy will not go into a recession,” he said.

“If you’re in it for the long haul, housing is a sound investment.”