Trade Group Says Sales Of Homes Will Slip in 2006

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Trade Group Says Sales
Of Homes Will Slip in 2006

From Dow Jones Newswires

The National Association of Realtors expects sales of new and existing U.S. homes to drop to "high plateau" levels in 2006, while home prices continue to rise.

Existing-home sales, expected to rise 4.7% to a record 7.1 million this year, are projected to fall 3.7% in 2006 to 6.84 million, the second-biggest figure on record, the NAR said. The realtors' group foresees a similar trend for new homes, with sales projected to drop 4.8% next year to 1.23 million, also the second-biggest number on record.

"Home sales are coming down from a mountain peak, but they will level out at a high plateau -- a plateau that is higher than previous peaks in the housing cycle," NAR Chief Economist David Lereah said. "This transition to a more normal and balanced market is a good thing."

Housing construction is also expected to fall back after reaching this year the highest point since 1972. The NAR projects housing starts will decline 4.8% next year to 1.92 million.

Despite slowing activity, the NAR says it expects the national median home price to continue to increase next year, as it has each year since reliable record keeping began in 1968. The U.S. median price for existing homes is expected to rise 6.1% next year to $221,400 after an estimated 12.7% surge this year. The median price for new homes is projected to increase 7.3% next year to $250,100 after rising 5.5% this year.

Temporary price declines in certain areas are still possible if job markets are weak or housing is oversupplied, but the odds of home-price appreciation remain "very good," NAR President Thomas Stevens said.

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-- December 14, 2005