U.S. home sales fall off record pace of 2005, 2004

“We’ve seen a minor easing in closed transactions of existing-home sales and a slight increase in the leading indicator of pending sales based on contracts,” said NAR Chief Economist David Lereah in a news release. “New-home sales and housing starts have been fluctuating, so the overall market is stabilizing.”

Lereah noted that rising interest rates are slowing sales in many markets, while at the same time there have been 3.8 million new jobs generated in the last two years.

“This means many potential home buyers could enter the market in the foreseeable future, especially in moderately priced areas where affordability conditions remain favorable,” he said.

Although sales will be fairly steady over the balance of the year, declines since last fall mean annual totals will be lower. Existing-home sales are forecast to fall 6.5 percent to 6.61 million in 2006, the third-highest year on record after 2005 and 2004. New-home sales are projected to drop 12.8 percent in 2006 to 1.12 million, also the third best on record. Housing starts should be down 9.1 percent to 1.88 million this year.

NAR President Thomas M. Stevens from Vienna, Va., said current market conditions are favorable for buyers. “Clearly, this has taken pressure off of home prices and has significantly widened choices for buyers,” he said.

The national median existing-home price for all housing types is forecast to grow 4.3 percent this year to $229,000, while the median new-home price is expected to rise 0.5 percent to $242,100 as builders offer incentives to clear unsold inventory.

NAR expects unemployment to average 4.7 percent for the rest of the year. Inflation, as measured by the Consumer Price Index, is expected to be 3.5 percent for 2006, while growth in the U.S. gross domestic product is projected at 3.5 percent.

The unemployment rate should average 4.7 percent for the balance of the year. Inflation, as measured by the Consumer Price Index, is likely to be 3.5 percent for 2006, while growth in the U.S. gross domestic product is projected at 3.5 percent. Inflation-adjusted disposable personal income is expected to grow 3 percent in 2006.

NAR will release existing-home sales for July on Aug. 23 at www.realtor.com. The Pending Home Sales Index is slated for Sept. 1, with the next forecast scheduled Sept. 7.