New-home sales should decline 23.7 percent to 590,000 this year before rising 7.2 percent to 633,000 in 2009, according to the latest forecast by the National Association of Realtors (NAR).
Housing starts, including multifamily units, will probably fall 25.1 percent to 1.01 million this year, and then continue to slip another 2.7 percent to 987,000 in 2009.
"As builders sharply cut back production, vacant new-home inventory has consistently declined over the past year-and-a-half,” said Lawrence Yun, NAR chief economist.
"That will permit a quicker return to balanced market conditions in many local areas.”
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The median new-home price is likely to fall 6.1 percent to $232,200 this year, and then rise 5.1 percent in 2009.
The volume of existing-home sales is expected to hold steady through late spring, with a gradual recovery during the second half of the year as the mortgage situation improves in high-cost areas.
Yun said many buyers have been waiting for higher mortgage loan limits.
"The higher loan limits for both FHA and conventional loans will increase consumer choice and provide greater access to lower interest rate mortgages in high-cost regions,” he said.
"Therefore, a notable rise in home sales can be anticipated in the second half of the year."
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in January, held at a stable level of 85.9, unchanged from December, but was 19.6 percent below the January 2007 reading of 106.8.
"This additional sign of a stabilizing market is encouraging, and our members are telling us there’s been a pickup in shopping activity,” Yun said.
"Our hope is that the increased traffic of buyers looking at homes will translate soon into more contract offers.”
Existing-home sales are forecast to remain flat around an annual level of 4.9 million in the first half of the year before improving to a 5.8-million pace in the second half.
With a weak first half, total sales for 2008 are projected at 5.38 million, but are then seen to rise 3.5 percent to 5.60 million in 2009.
The aggregate existing-home price is projected to decline 1.2 percent to a median of $216,300 this year, and then increase 3.5 percent to $223,800 in 2009.
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