Existing-Home Sales to Trend Upward in 2007

Cape Cod Real Estate Updates:

Existing-Home Sales to Trend Upward in 2007

Existing-home sales are expected to rise gradually in 2007 from current levels, with annual totals slightly lower than 2006, while new-home sales will continue to slide, according to the latest forecast by the NATIONAL ASSOCIATION OF REALTORS®.

David Lereah, NAR’s chief economist, says market conditions will vary around the country next year.

“Roughly three-quarters of the country will experience a sluggish expansion in 2007, while other areas should continue to contract for at least part of the year,” he says. “Most of the correction in home prices is behind us, but general gains in value next year will be modest by historical standards.”

For Buyers, a Window of Opportunity

“Buyers, especially first-time buyers, with the combined benefits of seller flexibility and an unexpected drop in mortgage interest rates, have a window of opportunity,” he adds. “These conditions will persist in many areas until early spring when inventory supplies are likely to become more balanced.”

Existing-home sales for 2006, finishing the third-best year on record, are projected at 6.47 million, a decline of 8.6 percent from 2005. For 2007, sales expected to rise steadily to an annual total of 6.40 million, which would be 1 percent lower than this year’s total.

“By the fourth quarter of 2007, existing-home sales will be 4.6 percent higher than the current quarter,” Lereah says.

Builders Slow New-Home Construction

New-home sales in 2006 are expected to fall 17.7 percent to 1.06 million, the fourth highest total on record, before sliding an additional 9.4 percent in 2007 to 957,000.

Much of the contraction in the new housing market results from cuts in builder construction to support pricing for current inventories. In addition, high construction costs in many areas are taking a bite out of potential profits.

Total housing starts for 2006 are likely to drop 12.3 percent to 1.82 million units, with another 15.1 percent decline in 2007 to 1.54 million.

Source: — REALTOR® Magazine Online

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