National Association of Realtors Housing Market Update

David Lereah, NAR's chief economist, said modest gains are expected for home sales. "As the housing market recovers from its correction, existing-home sales should be rising gradually during 2007 - it looks like we may have reached the low point for the current cycle in September." he said. "We've entered a more sustainable period of home sales now, and we expect greater support for prices over time as inventory levels are eventually drawn down." Total housing inventory levels fell 1.0 percent at the end of November to 3.82 million existing homes available for sale, which represents a 7.3 month supply at the current sales pace. The national median existing-home price for all housing types was $218,000 in November, which is 3.1 percent lower than November 2005 when the median price was $225,000. The median is a typical market price where half of the homes sold for more and half sold for less. "For every 1.0 percent drop in home prices, we project an additional 50,000 buyers are drawn into the market, "Lereah said. Existing home sales are expected to rise gradually in 2007 from current levels, with annual totals comparable to 2006, while new hom sales will continue to slide. Lereah said there are mixed conditions around the United States. "Roughly three quarters of the country will experience a sluggish expansion in 2007, while other areas should continue to contract for at least part of the year," he said. "Most of the correction in home prices is behind us, but general gains in value next year will be modest by historical standards." "Buyers, especially first-time buyers, with the combined benefits of seller flexibility and an unexpected drop in mortgage interest rates, have a window of opportunity. These conditions will persist in many areas until early spring when inventory supplies are likely to become more balanced." Lereah said.