Washington, D.C., April 11, 2006--New home sales may fall nearly 11 percent in 2006, and existing-home sales are projected to drop 6.0 percent to 6.65 million this year from a record 7.08 million in 2005, according to a report by the National Association of Realtors (NAR).
Despite these declines, overall, sales should level out not far from historic highs, the NAR report says.
David Lereah, NAR’s chief economist, said mortgage interest rates are trending up but will remain favorable. “Economic growth and job creation are providing a favorable backdrop for the housing market, but rising interest rates have an offsetting effect,” Lereah said. “Home sales will move up and down somewhat over the remainder of the year but stay at a high plateau, meaning this will be the third strongest year on record.” He expects the 30-year fixed-rate mortgage to rise to 6.9 percent by the end of the year.
Growth in the U.S. gross domestic product is forecast at 3.7 percent in 2006, while the unemployment rate should average 4.8 percent.
New-home sales are likely fall 10.9 percent to 1.14 million from the record 1.28 million last year--still, new and existing home sectors would see the third best year following 2005 and 2004. Housing starts are forecast at 2.00 million in 2006, which is 3.2 percent below the 2.07 million in total starts last year.
