Realtors Official Forecasts Decline In Home Prices
By JAMES R. HAGERTY
September 2, 2006
The chief economist of the National Association of Realtors predicts that U.S. home prices will generally decline during the next few months.
The unusually bleak assessment from David Lereah, the trade group's top economist, came as the Realtors reported that their index of pending home sales dropped 7% in July. The decline shows that home shoppers continue to take their time, hoping prices will fall amid a glut of houses on the market in many parts of the country.
"I'm hoping for prices to drop," Mr. Lereah said in an interview. The Realtors normally stress the tendency of home prices to rise over the long term. But Mr. Lereah said lower prices are needed in some parts of the U.S. to lure buyers back into the market. During the past year, sales have plunged in California, southern Florida and the Washington, D.C., area, all places where prices more than doubled in the first half of this decade.
Sales have stalled partly because "the sellers are not bringing prices down fast enough," Mr. Lereah said. "They've been very stubborn." A drop of 5% to 10% in California and southern Florida "probably would be enough to bring sales back," he said.
For July, the Realtors reported that the national median home price was up 0.9% from a year earlier. But Mr. Lereah said he expects the national median to decline modestly in the next few months. That would mark the first decline since 1993. "The quicker we can get negative prices, the quicker we can get sales coming back," Mr. Lereah said.
Thomas Lawler, a housing economist in Vienna, Va., said the national median home price in this year's fourth quarter is likely to be down 3% to 4% from a year earlier.
In recent months, median prices in some areas -- including San Diego, Boston, the Virginia suburbs of Washington and parts of Florida -- already have fallen from year-earlier levels.
The pending-sales index, which equates the average pending-sales rate of 2001 to 100, registered 105.6 in July. The latest reading was down 7% from June and 16% from July 2005. The index, based on signed contracts for home sales that haven't yet been completed, has fallen nearly 18% since hitting a peak of 128.2 in August 2005.
By region, the July index was down 20% from a year earlier in the West and Midwest, 16% in the Northeast and 11% in the South.
On Wednesday, the Mortgage Bankers Association reported that its seasonally adjusted index of applications for home-purchase mortgages declined 1.6% in the week ended Aug. 25. That index -- a measure of demand for homes -- is down about 20% from a year ago.
By JAMES R. HAGERTY
September 2, 2006
The chief economist of the National Association of Realtors predicts that U.S. home prices will generally decline during the next few months.
The unusually bleak assessment from David Lereah, the trade group's top economist, came as the Realtors reported that their index of pending home sales dropped 7% in July. The decline shows that home shoppers continue to take their time, hoping prices will fall amid a glut of houses on the market in many parts of the country.
"I'm hoping for prices to drop," Mr. Lereah said in an interview. The Realtors normally stress the tendency of home prices to rise over the long term. But Mr. Lereah said lower prices are needed in some parts of the U.S. to lure buyers back into the market. During the past year, sales have plunged in California, southern Florida and the Washington, D.C., area, all places where prices more than doubled in the first half of this decade.
Sales have stalled partly because "the sellers are not bringing prices down fast enough," Mr. Lereah said. "They've been very stubborn." A drop of 5% to 10% in California and southern Florida "probably would be enough to bring sales back," he said.
For July, the Realtors reported that the national median home price was up 0.9% from a year earlier. But Mr. Lereah said he expects the national median to decline modestly in the next few months. That would mark the first decline since 1993. "The quicker we can get negative prices, the quicker we can get sales coming back," Mr. Lereah said.
Thomas Lawler, a housing economist in Vienna, Va., said the national median home price in this year's fourth quarter is likely to be down 3% to 4% from a year earlier.
In recent months, median prices in some areas -- including San Diego, Boston, the Virginia suburbs of Washington and parts of Florida -- already have fallen from year-earlier levels.
The pending-sales index, which equates the average pending-sales rate of 2001 to 100, registered 105.6 in July. The latest reading was down 7% from June and 16% from July 2005. The index, based on signed contracts for home sales that haven't yet been completed, has fallen nearly 18% since hitting a peak of 128.2 in August 2005.
By region, the July index was down 20% from a year earlier in the West and Midwest, 16% in the Northeast and 11% in the South.
On Wednesday, the Mortgage Bankers Association reported that its seasonally adjusted index of applications for home-purchase mortgages declined 1.6% in the week ended Aug. 25. That index -- a measure of demand for homes -- is down about 20% from a year ago.
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