Pending home sales decline, gains forecast for 2nd half stays put
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A modest near-term movement is expected in existing-home sales, with an expected during the second half of the year, according to the latest forecast by the National Association of Realtors®.
The Pending Home Sales Index (PHSI),a forward-looking indicator based on contracts signed in May, fell 4.7 percent to 84.7 and remains 14.0 percent below May 2007 when it stood at 98.5.
The PHSI in the West slipped 1.3 percent to 97.5 in May but is 2.0 percent higher than May 2007. In the Northeast, the index declined 2.9 percent to 77.0 in May and is 16.4 percent below a year ago. The index in the Midwest fell 6.0 percent to 78.6 and is 13.8 percent below May 2007. In the South, the index dropped 7.1 percent in May to 84.5 and is 22.1 percent below a year ago.
“The overall decline in contract signings suggests we are not out of the woods by any means. The housing stimulus bill that is still being considered in the Senate is critical to assure a healthy recovery in the housing market, jobs and the economy,” said Lawrence Yun, NAR chief economist.
Based on current indicators, the 30-year fixed-rate mortgage is forecast to rise gradually to 6.5 percent by the end of this year, and then hold at that level for most of 2009. NAR’s housing affordability index is improving this year and is likely to rise 15 percentage points to 127.0 for all of 2008.
Existing-home sales are expected to grow from an annual pace of 5.01 million in the second quarter to 5.75 million in the fourth quarter. For all of 2008, existing-home sales should total 5.31 million, and then increase 5.0 percent next year to 5.58 million.
Other leading US economic indicators for the US economy:
- Growth in the U.S. gross domestic product (GDP) is seen at 1.6 percent in 2008 and 1.4 percent next year.
- The unemployment rate should average 5.4 percent this year and 5.8 percent in 2009.
- Inflation, as measured by the Consumer Price Index, is forecast at 3.7 percent this year and 2.4 percent in 2009.
- Inflation-adjusted disposable personal income is projected to grow 1.5 percent in both 2008 and 2009.
SOURCE: National Association of Realtors
