NAR Economist: Housing Forecast Hopeful

SAN DIEGO-”We’ve seen a steady downtrend in housing inventory for well over a year, and home prices appear to be in the early stages of stabilizing,” according to NAR chief economist Lawrence Yun, who spoke about the National Association of Realtors’ housing and economic forecast during the NAR conference in San Diego, an event that drew more than 19,000 attendees. “With expansion of the tax credit to additional buyers through the middle of next year, and no major unforeseen events impacting the economy, home prices should rise between 3% and 5% in 2010, but with wide geographic differences,” Yun said.

Yun noted that the projections are enhanced by a tax credit expansion to more home buyers through the middle of 2010. “Given the success of the first-time buyer tax credit to date, and the need for qualified buyers to continue to absorb inventory that will include additional foreclosures over the coming year, we are hopeful about the impact of the expanded tax credit because it will stabilize home prices,” he said. “In fact, the credit is working better than first projected–it now looks like we’ll have 2.3 to 2.4 million first-time buyers this year.”

According to an NAR consumer study, first-time buyers accounted for a record 47% share of home sales over the past year, up from 41% in the 2008 survey. The share has risen steadily since a cyclical low of 36% in 2006. Existing-home sales are expected to total 5.01 million in 2009, a gain of 2% over last year, and then are forecasted to rise 13.6% to 5.69 million in 2010. “A steady draw down of inventory will help home values to turn positive in 2010,” said Yun, “but risks such as unemployment remain in the economy.”