Us market will 'rise from the dead'

US Home prices are expected to recover during the rest of 2008 with existing-home sales picking up late this year and new-home sales rising early next year, according to the latest forecast by the National Association of Realtors...

Lawrence Yun, NAR senior economist, commented:  "A good buyers’ market has evolved and buyers now have an overwhelming advantage given the wide selection of homes available in many markets. But with profit margins coming under pressure, homebuilders will limit new construction well into 2008.  This should help the overall inventory level to move steadily into a more balanced state.”  

Existing-home sales are expected to total 6.37 million in 2008, down from 6.48 million last year.  New-home sales are projected at 865,000 in 2007 and 878,000 next year, compared with 1.05 million in 2006.  Housing starts, including multifamily units, are forecast at 1.43 million units this year and 1.44 million in 2008, down from 1.80 million last year.

Existing-home prices are likely to rise 1.8 percent to a median of $222,700 in 2008 after a 1.4 percent decline this year to $218,800.  The median new-home price should rise 2.2 percent to $245,400 next year following a 2.6 percent drop in 2007 to $240,100.

The 30-year fixed-rate mortgage is estimated to average 6.7 percent during the second half of this year, and fluctuate around 6.6 percent in 2008. Mr Yun added: “Markets that sharply reduce new construction in 2007 will generally experience respectable price increases in 2008. Local conditions vary considerably, but with historically low mortgage interest rates this summer and sustained job gains, it could be a good time for first-time buyers with a long-term view to test the housing waters.”