The consensus forecast was looking for pending sales to continue on a downward trajectory, estimating the fall for September to be 2.5%. Pending home sales are based on homes under contract but not yet closed.
Pending sales in September, though, were 20.4% lower than a year ago.
Economists had been expecting tighter mortgage markets to put further pressure on pending home sales, which tend to be a good forward indicator of existing home sales in the next couple of months.
NAR predicts existing home sales to be 5.67 million in 2007, compared to 6.48 million in 2006, and 5.69 million in 2008.
The median price of existing homes is projected by NAR to decline 1.7% this year to $218,200 and remain flat for 2008.
“Even with the relatively low fourth quarter sales, 2007 will be the fifth highest year on record for existing home sales,” Lawrence Yun, NAR chief economist, said.
NAR predicts existing home sales to start turning the corner in the first quarter of 2008, reaching an annual rate of 5.38 million, up from an estimated 5.08 million in Q4.
Pending home sales in September rose 5.4% in the Midwest and 1.5% in the South, while falling 10.1% in the Northeast and only 0.1% in the West. The West, thought, is down 25.6% for the year.
New home sales are forecast by NAR to total 796,000 this year and 693,000 in 2008, compared to 1.05 million in 2006. “Because builders have rightly made drastic cuts in production,” NAR said, “housing starts, including multi-family units, are forecast at 1.35 million this year and 1.14 million in 2008, down from 1.80 million in 2006.”
NAR’s new economic forecast calls for GDP growth of 2.1% in 2007 and 2.8% in 2008. The unemployment rate is expected to edge up to 4.9% next year.
By Marshall Taylor, mtaylor@economicnews.ca, edited by Stephen Huebl, shuebl@economicnews.ca
(END) ©CEP Newswires - ©CEP News Ltd. 2007. All Rights Reserved. www.economicnews.ca
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