Optimistic NAR forecasts growth in 2011
The National Association of Realtors (NAR), an association with a reputation for housing market optimism, expects gains in new and existing home sales and housing starts in 2011.
Among the forecasts presented in the NAR’s pending home sales announcement Thursday morning were the following:
• New home sales are estimated to rise 24% to 392,000 in 2011;
• Existing home sales are projected to rise about 8% to 5.2 million;
• Housing starts are forecast to rise 21% to 716,000; and
• Gross Domestic Product is expected to grow 2.5% in 2011.
“All the indicator trends are pointing to a gradual housing recovery,” said Lawrence Yun, NAR chief economist. “Home price prospects will vary depending largely upon local job market conditions. The national median home price, however, is expected to remain stable even with a continuing flow of distressed properties coming onto the market, as long as there is a steady demand of financially healthy home buyers."
The NAR was overly optimistic when looking ahead to 2010. In November of 2009, the group forecast existing home sales to be about 5.7 million in 2010. The actual figure is about 4.8 million. In late 2009, the group also forecast 2010 housing starts at about 752,000 for 2010 — off by about 150,000.
Pending home sales rise in November
The National Association of Realtors (NAR) interpreted a rise in pending home sales as a sign of a gradual housing market recovery in 2011.
The NAR’s Pending Home Sales Index rose 3.5% to 92.2 in November, compared to October. The index is down, however, from the reading of 97.0 in November of last year.
Lawrence Yun, the group’s chief economist, added that further economic gains are needed to realize a recovery.
“If we add 2 million jobs as expected in 2011, and mortgage rates rise only moderately, we should see existing-home sales rise to a higher, sustainable volume,” Yun said. “Credit remains tight, but if lenders return to more normal, safe underwriting standards for creditworthy buyers, there would be a bigger boost to the housing market and spillover benefits for the broader economy.”
Case-Shiller says home prices weakened in October
Home prices across the United States weakened in October, according to the S&P/Case-Shiller Home Price Indeces.
Home prices decreased in all 20 MSAs (metropolitan statistical areas) from their September levels, according to the report.
The chairman of the index committee did not attempt to sugar-coat the data, as six cities set new lows for the period since their peaks in 2006.
"There is no good news in October’s report," said David M. Blitzer, chairman of the index committee at Standard & Poor’s. "Home prices across the country continue to fall. The trends we have seen over the past few months have not changed. The tax incentives are over and the national economy remained lackluster in October, the month covered by these data."
The six cities setting new lows on the index were: Atlanta; Charlotte, N.C.; Miami, Fla.; Portland, Ore.; Seattle and Tampa, Fla.