Realtors Pare Back Forecast Again,
But Project Rebound Next Year

The National Association of Realtors continued to pare back its forecast for existing U.S. home sales in 2007, while projecting a modest rebound for the struggling housing market in 2008.

In its latest forecast for the real estate market, NAR on Wednesday projected that existing home sales will fall 5.6% this year to 6.11 million, compared with its previous forecast of a 4.6% decline.

New-home sales are also expected to be soft this year. The NAR said new home sales are likely to fall 17.7% to 865,000, compared with the prior forecast of a 18.2% drop.

Lawrence Yun, NAR's senior economist, said a good buyer's market had developed, amid falling prices and swelling housing inventories.

And with homebuilders' profits being squeezed by the slowdown, the resulting drop in new home construction may help reduce the backlog of unsold homes. "With profit margins coming under pressure, homebuilders will limit new construction well into 2008," Mr. Yun said in a statement.

"This should help the overall inventory level to move steadily into a more balanced state," he added. With that in mind, NAR remains sanguine about the housing market in 2008, projecting existing home sales will rise 4.2%, to 6.37 million.

New home sales are expected to increase at a much more modest pace, with NAR forecasting a 1.4% rise to 878,000 in 2008. "Markets that sharply reduce new construction in 2007 will generally experience respectable price increases in 2008," Mr. Yun said.

The national median existing-home price is forecast to slip 1.4% to $218,800 this year, and then rise 1.8% in 2008. The median new-home price is expected to fall 2.6% this year to $240,100, and then rise 2.2% next year.

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