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% 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% 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% lower than February 2006 and 7.6% 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% drop in second-quarter home orders. That’s on top of a 23% 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 %. Sales
fell 8 % in 2006.
- New-home sales down 14 %. Sales fell 18 % in
- Housing starts down 18 %. Starts fell 13 % in
- Spending on residential construction down 14 %. Spending fell 4 % in 2006.