National Home Sale’s 2009 Outlook

The Environment

After falling for two years in a row, sales of existing homes are expected to edge up 6% in 2009 to 5.3 million. Even with an increase in unemployment, improved affordability is the reason. NAR’s affordability index jumped to 131 at the end of 2008, up 17 percent from 112 in 2007. It’s expected to hover around a still-high 128 in 2009. The index means households earning the national median income have 131 percent of the income needed to buy the national median-priced house.Meanwhile, new-homes sales, already off more that 50 percent from their peak of 1 million in the third quarter of 2006, are expected to continue dropping, to about 413,000 in 2009.Prices have dropped nationally about 12 percent from their peak in 2006, from a national median of $221,900 to $198,600. In some of the markets that were hottest during the boom, prices have dropped even more, as much as 30 percent in Los Angeles and 24 percent in Las Vegas. The drop has made life tough for seller with little equity in their homes. Some 40 percent of sales in the third quarter of 2008 were distressed sales, either short sales or forecloses, and according to NAR data. For 2009, prices are expected to turn a corner.

Outlook: Sales on the Rise

Existing- Homes                             2007                **2008                 **2009 

Sales (in millions)                            5.7                        5.0                         5.3

   

Prices                                        218,900            198,600                 200,800

Price Changes                             -1.4%                 -9.3%                      1.1% 

New Homes                                  2007                2008*                  2009**

Sales                                           775,000            487,000               413,000  

Prices                                          247,200            228,200              231,400 

Price Changes                            0.3%                  -7.7%                    1.4% 

AFFORDABILITY INDEX      112                      131                      128  

 *Estimated  **ProjectedSource: NAR 

By Robert FreedmanSource: Realtor Magazine Jan 09 Issue

Posted by Nilesh Jethwa Wilmington,NC Real Estate

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