Home Price Slump Through ’08

Home Price Slump Through ’08

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Home values and housing sales will take an even bigger hit than previously forecast and will not recover to their earlier levels throughout all of 2008, at least, according to the latest economic outlook from the National Association of Realtors (NAR).

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While the NAR sees gains in prices in 2008 from the current weak levels, it projects that the median existing home price will be $224,600 in the fourth quarter of next year.� That would still put the price slightly below the record price reading of $225,000 in the third quarter of last year.

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The trade group now says it expects a 3.7 percent decline in existing home prices in the third quarter of 2007 compared to a year earlier, which is worse than the previous forecast of a 2.2 percent decline. And the fourth quarter should see prices down 1.3 percent from a year ago, rather than the 1 percent drop that was previously forecast.

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The weakness in prices is being fed by the slowdown in sales, which has resulted in a glut of homes on the market. And that slump in sales is now expected to be worse than the group’s earlier estimates.

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The group is now forecasting an 8.6 percentage drop in the pace of existing home sales this year, which is not only worse than its previous estimate of a 6.8 percent decline but also would top the 8.5 percent drop seen in 2006.� While the group believes existing home sales should rebound 5.8 percent in 2008 that would still leave the volume of sales more than 11 percent below the record sales of 7.1 million seen in 2005.

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