Based on middle-ground assumptions, the National Association of Realtors (NAR) forecasts existing-home sales to total 4.96 million this year, and then increase to 5.19 million in 2009 and 5.55 million in 2010.
According to NAR’s chief economist, Lawrence Yun, the home price correction to date has brought prices in line with the fundamentals of the marketplace, but Yun warns that “buyer pessimism could cause prices to overshoot downward, resulting in further economic deterioration.”
NAR also projects that the 30-year fixed-rate mortgage will decline to 5.6 percent in the first quarter of next year, rise slowly to 6.0 percent by the end of 2009, and average 6.2 percent in 2010.
The association also said it expects the unemployment rate to reach 7.2 percent in the first quarter, rising to 8.3 percent by the end of 2009.
According to an NAR report released yesterday, pending home sales have eased against a deteriorating economic backdrop but remain in a stable range. NAR’s Pending Home Sales Index (PHSI), a forward-looking indicator based on contracts signed in October, slipped 0.7 percent to 88.9. That figure is down slightly from the September reading of 89.5 and is 1.0 percent below October 2007 when it was 89.8.

Yun noted that a review of the past year is instructive. “Despite the turmoil in the economy, the overall level of pending home sales has been remarkably stable over the past year, holding in a generally narrow range,” he said. “We did see a spike in August when mortgage conditions temporarily improved, which underscores two things — there is a pent-up demand, and access to safe, affordable mortgages will bring more buyers into the market.”
Regional conditions remain uneven around the country, but NAR reports that some areas are showing healthy gains in pending home sales from a year ago, including many Florida and California markets; Providence, Rhode Island; Lansing, Michigan; Oklahoma City; and Las Vegas.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said he’s hopeful that recent considerations by the U.S. Treasury regarding mortgage interest rates will soon become a reality. “Efforts to bring down mortgage interest rates demonstrate a clear understanding of the role housing plays in stabilizing the economy,” McMillan said.
“We’re very encouraged by all of the proposals getting serious consideration in Washington to help home buyers. More sales will stabilize home prices by bringing down inventory, and would lessen foreclosure pressure,” McMillan added.