US Realtors Trade Group Predicts Lower Housing Prices, Falling Sales Of New And Existing Homes

[Purveyor]

Source: Associated Press

WASHINGTON: A real estate industry trade group said Wednesday it expects sales of existing homes in the U.S. to drop 4.6 percent this year to 6.2 million

Two months ago, the group had predicted a 2.2 percent decline for the year.

Sales of new homes are forecast to drop 18.2 percent to 860,000 compared with an earlier estimate of a 14.2 percent decline, the National Association of Realtors said in a statement.

The NAR also predicts the median price of existing homes, which make up about 85 percent of the market, will fall in 2007 for the first time since the 1960s, when the group began keeping records.

The median price for existing homes is expected to drop 1.3 percent to $219,000 (€162,066) this year, lower than the group's April forecast of a 0.7 decline.



Read more: http://www.iht.com/articles/ap/2007/06/06/business/NA-FIN-US-Realtors-Outlook.php

[Demeter]

1. I'd Say the Writing Is on the Wall

What is amazing to me is that they would be so up front and open about it, instead of following federal protocols to lie, distort, deny, etc.

[QC]

2. Whatever the NAR says,

expect it to be much worse. They are a cheerleading group for the housing salespeople, so they are always relentlessly optimistic, to put it politely.

If they are saying things will be a bit rough, then things will be abysmal.

[Purveyor]

5. I suspect you are right, it is going to be 'much worse', indeed. eom

[LEW]

3. I'm a realtor and I agree - have seen this coming

This is one of the few times the NAR is right on with their predictions. The thing is that "this too will change", but I fear that is more than 2 years away. Wish I could hold on but shrub has made sure that I need an good income to even come close to surviving. I took a new job today, and there will be and have been many realtors that will follow suit. I've tried to hold on to my business so that when things change I will be there, can't do it. I'm giving up the very good business I've built, over the last 11 years.

[Barrett808]

4. Nouriel Roubini is "almost not bearish enough"

As expected US Q1 GDP growth was revised down to 0.6% from its initial estimate of 1.3%; 0.6% was even worse than the consensus forecast of 0.8% and this blogger's forecast last month of 0.7%. This means that in Q1 of this year the US was already in a "growth recession".

As discussed by many authors - including this blogger - a hard landing can take two forms: a growth recession (i.e. a period when growth is well below potenial and ranging in the 0% to 1% range) or an outright recession (i.e. negative growth). Thus, in Q1 of this year the US entered in a growth recession, and a pretty serious one indeed.

Of course the consensus today is that Q1 was the bottom of the US growth slowdown and that GDP growth will recover to a level above 2.0-2.5% in Q2 and for the rest of the year. I.e., the consensus is that we are in a temporary soft patch. While some supply side data suggest a stabilization of some sectors of the economy (manufacturing, services, etc.) the key concerns now are the deepening housing recession and whether the US consumer is on the rope. Let us discuss both of them.

As far as housing is concerned, the housing recession and the credit crunch in the mortgage market are clearly worsening. This writer was the featured speaker the other night at an event organized by one of the top 10 global financial institutions; after I gave my bearish outlook for the US economy and the housing market (in a debate with the chief economist of this firm), the four senior analysts of this bank for the housing sector, the mortgage lender sector and the MBS sector gave their outlook (it is all in public reports available for clients/investors of this firm).

In brief, their view is that: the housing market is still weakening and - based on their May survey of traffic - housing sales traffic is close to dead; it would take developers to shut down all new construction for almost a year to get rid of the excess supply of unsold homes; thus, downward home price action may continue for the next two years; the credit crunch in the mortgage market is only at its early stages and the distress and crunch is spreading from sub-prime to Alt-A and near prime mortgages; the major mortgage lenders have not yet started to get a reality check on how bad their assets are and properly mark them to market; the ABX index (the BBB- tranche) collapsed from near parity down to 60 in the last few months and has now recovered to close a still low 67; but, given how lousy were mortgage originations in 2005 and 2006, deliquencies in subprime will further increase in the next few months and further downward pressure in the ABX indexes may be expected.

This writer has been a serious bear on housing for a long time: but after listening to these most sophisticated analysts of housing, mortgage lending and the MBS markets from a top global financial firm my concerns seemed almost not bearish enough. The main message from these analysts and the data is that the housing recession, the subprime carnage and the broader mortgage mess are getting worse, not better; and things will get worse well into 2008. There is no end in sight to the housing recession and we are only in the first innings of the mortgage credit crunch.

(more)

http://www.rgemonitor.com/blog/roubini/197471