Realtors predict soft landing for housing market next year

Realtors predict soft landing for housing market next year
SAN FRANSCISCO - Delegates at the National Association of Realtors conference were told to expect a cooling down of the housing market in the next year as sales are predicted to slow down and the prices are expected to keep rising.

David Lereah, chief economic forecaster of the National Association of Realtors agreed that the best times in the property market had been reached and that the time was ripe for a correction, "It's the peak of the boom," Lereah acknowledged. "But we're looking at a soft landing next year. I can't guarantee that there won't be some hard landings in some markets, where prices will actually decline. In fact, there will probably be two or three over the next two years that do pop."

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forecast that sales of existing homes would fall by 3.5 percent to 6.86 million. New home sales in the next year are predicted to dip by 4.5 percent to 1.24 million. The national average home price for existing homes increased 12.4 percent to $208,100 this year and it is again forecast to rise by 5.3 percent to $219,200 in 2006.

The new home prices surged 4.1 percent to $230,200 this year and they would rise 7.3 percent to $247,000 in 2006, the NAR has said. "An uptrend in mortgage interest rates will cause some slowing of the sales pace, but we forecast 2006 to be the second highest year on record and housing will continue to support the overall economy," Lereah said.

There would only be a rise of 6.7 percent in the 30-year fixed-rate mortgage segment by the end of 2006, NAR said. "As interest rates rise and home sales ease, it should help to bring the market closer to equilibrium between home buyers and sellers. That is expected to take pressure off of home prices and allow appreciation to settle to a more normal pace in 2006," Lereah concluded.