Existing home prices are predicted to fall this year, according to the latest monthly housing report released today from the National Association of Realtors.
While the 0.7-percent drop in median price is modest, it’s the first time the real estate agents’ trade group has announced an annual decrease since it started tracking prices of single-family existing homes in 1968.
The trade group blamed tighter lending standards, which will cut into home sales even further than it had been projecting. A month ago, the NAR was projecting a 1.2 percent increase for the median price of an existing home sold in 2007.
Slower sales have already produced declines in home prices when comparing monthly figures. The median price in February, for example, was 1.3 percent lower than February 2006 and 7.6 percent below the record-high price data record last July.
In related news, D.R. Horton, the second largest homebuilder in the country, reported yesterday a 37-percent drop in second-quarter home orders. That’s on top of a 23-percent drop in first-quarter orders. The company is particularly susceptible to tighter credit since it caters to first-time homeowners.
David Lereah, chief economist for the NAR made the following forecast for the rest of this year:
- Existing home sales down 2 percent.
Sales fell 8 percent in 2006.
- New-home sales down 14 percent. Sales fell 18
percent in 2006.
- Housing starts down 18 percent. Starts fell 13
percent in 2006.
- Spending on residential construction down 14 percent. Spending fell 4 percent in 2006.
