Tuesday, July 11, 2006

The Incredible Shrinking NAR Forecast

I have to admit, I do find it entertaining to watch the NAR change their forecast with every press release they issue. Month after month their forecast is revised downward and further downward still. While the overall change has been minor, it's most certainly something I'm going to keep my eye on.


July 11th, 2006

Existing-home sales are expected to decline 6.7 percent to 6.60 million in 2006 from 7.08 million last year. That would still be the third highest level on record. New-home sales should fall 12.8 percent this year to 1.12 million from 1.28 million in 2005. Housing starts are forecast to decline 6.8 percent to 1.93 million this year from 2.07 million in 2005.

The 30-year fixed-rate mortgage is likely to reach 7.0 percent by the end of the year.

June 6th, 2006

Existing-home sales are projected to drop 6.8 percent to 6.60 million this year from the record 7.08 million in 2005. New-home sales are forecast to fall 13.4 percent to 1.11 million from a record 1.28 million in 2005. Housing starts are likely to decline 6.2 percent to 1.94 million in 2006 compared with 2.07 million last year.

May 9th,2006

Existing-home sales are likely to fall 6.4 percent to 6.62 million in 2006 from a record 7.08 million last year. New-home sales are projected to drop 11.6 percent to 1.13 million from last year’s record of 1.28 million. Housing starts should decline 3.7 percent to 1.99 million this year compared with 2.07 million in 2005.

April 11th, 2006

Existing-home sales are projected to drop 6.0 percent to 6.65 million this year from a record 7.08 million in 2005. New-home sales are likely fall 10.9 percent to 1.14 million from the record 1.28 million last year – both sectors would see the third best year following 2005 and 2004. Housing starts are forecast at 2.00 million in 2006, which is 3.2 percent below the 2.07 million in total starts last year.

March 13, 2006

Existing-home sales are expected to fall 5.7 percent to 6.67 million in 2006 from
the record 7.08 million last year. At the same time, new-home sales are forecast to decline 7.7 percent to 1.18 million from a record 1.28 million in 2005 – each sector would be at the third highest year following the tallies for 2005 and 2004. Housing starts are likely to total 1.98 million this year, down 4.3 percent from 2.06 million in 2005.

February 7th, 2006

Existing-home sales are likely to decline 4.7 percent to 6.74 million this year, down from a record 7.07 million units in 2005, while new-home sales are expected to fall 8.5 percent to 1.17 million from a record 1.28 million in 2005; both sectors
would see their third best year after the totals for 2005 and 2004. Housing starts are seen at 1.87 million units in 2006, down 9.3 percent from 2.06 million last year.

The 30-year fixed-rate mortgage should rise to 6.9 percent by the end of the year.

January 10th, 2006

After setting a fifth consecutive annual record, projected to 7.10 million units for 2005, * existing-home sales are forecast to ease by 4.4 percent to 6.79 million this year, which would be the second highest on record. New-home sales, which should be a record 1.29 million for 2005, are expected to decline 6.0 percent to 1.21 million in 2006 – that also would be the second best year in history. Total housing starts for 2005 are seen at 2.07 million units – the highest since setting a record 1972 – with a 6.6 percent slowing to 1.94 million this year.

December 12th, 2005

Existing-home sales, expected to rise 4.7 percent to 7.10 million this year, are likely to decline 3.7 percent in 2006 to 6.84 million. New-home sales, projected to increase 7.0 percent to 1.29 million this year, are forecast to drop 4.8 percent to 1.23 million in 2006 – also the second best on record. Total housing starts for 2005 should grow 5.8 percent to 2.06 million units, the highest since 1972, and then decline 4.8 percent to 1.92 million next year.

October 28th, 2005

Existing-home sales, which should increase 4.8 percent to 7.11 million this
year, are projected to decline 3.5 percent in 2006 to 6.86 million. New-home sales, seen to grow by 8.0 percent to 1.30 million in 2005, are expected to fall 4.5 percent to 1.24 million next year. The figures for 2006 would be the second highest year for each sector.

Total housing starts this year are forecast to be the highest since 1972, rising 5.7 percent to 2.06 million units, before declining 4.6 percent to 1.97 million in 2006.

The 30-year fixed-rate mortgage is projected to rise slowly to 6.7 percent by the end of next year.


Caveat Emptor!
Grim

Source: National Association of Realtors

30 Comments:

Blogger delford said...

I am already seeing 30yr mtg money being quoted at 7%. I think by year end it will be in the 7.25 to 7.50 neighborhood.

7/11/2006 01:47:00 PM  
Anonymous Anonymous said...

delford,
I'm just curious but are you ever optimistic? You remind me of thoes guys who post on stock forums that short. Pump and dump, buy back when prices are low.
Is that what your hoping for?

7/11/2006 02:13:00 PM  
Blogger Mr. Oliver said...

Grim, not a huge change, in dollars, perhaps, but they've lowered their forcast by ten percent.

7/11/2006 02:22:00 PM  
Blogger delford said...

anon: Not sure what you are talking about, as your post is unclear.

Let me restate it for you, the report Grim posted from the NAR stated that it expects to see 30 yr FRM at 7% by year end.

I stated that I am seeing that now in July.
I then stated that I expect that 30 yr rates will be in the 7.25 to 7.50 neighborhood.

What pray tell does that have to do with pump and dump, and the rest of your post?

7/11/2006 02:35:00 PM  
Anonymous Anonymous said...

Great post!

7/11/2006 02:51:00 PM  
Blogger patient homebuyer said...

Saving money on your own takes discipline but, like most other things, it becomes easier over time. The peace of mind that comes from knowing you have financial resources for when times are rough can be worth the sacrifices you make now.

words l live by

7/11/2006 02:59:00 PM  
Blogger Shailesh Gala said...

In general, 1% increase in Interest Rate, reduces the loan amount by 10%, keeping the mortgage constant. If we consider Summer 2005 as peak, the rates have increased from 5.75 to already 6.5, and projected 7% by end of the year. That itself should result in 15% less affordability.

So far, we haven't seen 15% price reductions. I guess the Psycology has lot to do with this. It is turning around, but rather too slowly. Most think their house/area is different. I guess Patience is the key.

7/11/2006 03:19:00 PM  
Blogger Mr. Oliver said...

Gala, re the 1% increase, reducing the loan by 10%...

Thanks, as this is something I've been trying to get a handle on.

Could you put it into numbers for me?

7/11/2006 03:26:00 PM  
Blogger lindsey said...

The July forecast actually wasn't much different from June's. The thing that gets me is that Lereah has stayed with as small a drop as he has.

Over at the Housing Bubble Blog (Ben Jones) I've seen newspaper stories reporting y-o-y sales declines of 20-30+ percent in several very large markets (most recently D.C./No. Va.). At what point does the big slowdown in places like that and San Diego (off 33 percent last month and, according to Realty Times, off like 67 percent in the first 9 days of July) just swamp over the "hot" markets like Boise and Alburque?

7/11/2006 03:31:00 PM  
Anonymous LeeS said...

For Mr. Oliver:

Your Monthly Payment for 30 Years
for an Interest Rate of 5.750 %
on a Loan Amount of $ 350,000.00:
is
$ 2,042.50 a Month

Your Monthly Payment for 30 Years
for an Interest Rate of 6.750 %
on a Loan Amount of $ 315,000.00:
is
$ 2,043.08 a Month

7/11/2006 03:34:00 PM  
Blogger Mr. Oliver said...

Thanks Lees.

At least now I can quantify exactly how much house I can no longer afford.

7/11/2006 03:42:00 PM  
Blogger chicagofinance said...

Bear in mind the differential in P + I [small per month, but it adds up]

7/11/2006 03:44:00 PM  
Blogger Mr. Oliver said...

Thanks Chi, now I feel even worse.

7/11/2006 03:45:00 PM  
Anonymous Anonymous said...

That would still be the third highest level on record.

Why does NAR keep using the word record. The numbers are on the way down. I feel like they are trying to fool everyone into thinking this is such a great market to be in right.

Now we are breaking records like crazy. Record real estate market. Record numbers. Still record prices. Listing to real estate agents and real estate investors is like listing to used car sales people.

7/11/2006 03:47:00 PM  
Blogger chicagofinance said...

Meaning the higher interest rate means the same payment is composed of roughly $100 more per month in interest, which is deductible if you itemize.

7/11/2006 03:47:00 PM  
Blogger chicagofinance said...

Mr. Oliver said...
Thanks Chi, now I feel even worse.
7/11/2006 04:45:08 PM

No it's better!

7/11/2006 03:48:00 PM  
Blogger Mr. Oliver said...

So, a higher interest rate is better?

OK, Chi, come clean, you're a realtor with a $550 cape cod to sell me, right? LOL

Your clarification makes sense, thanks.

7/11/2006 03:52:00 PM  
Anonymous Anonymous said...

I actually think real estate agents are dummer.

At least with a used car salesman
you expect it.

Real Estate agents think most buyers are stupid.

Just remember , their are more real estate agents than doctors in
the US.

How many will wind up over at
a walmart,or a home depot is another subject.

7/11/2006 04:00:00 PM  
Anonymous Anonymous said...

"I actually think real estate agents are dummer."

Please reflect on that sentence.

:o)

7/11/2006 04:05:00 PM  
Blogger delford said...

mr. Oliver Do not worry, prices will be back at around 2002 levels soon. No need to fear the higher interest rates, they are your friend.

Whne rates come down again you can alwasy refinance, particulary with the samller savings banks who keep most of their loans in house.


Some of them have a very simplified refiancing mechanism, whereby the rate is changed, but the term remains the same.

For instance if you were 2 years into a 30Yr mtg, they would simply recalculate the rate, but the term would remain the same 28 years left to go. Much less paper work involved, costs are minor, and quick turn around time.

Remmeber in this environment rising rates are yout friend. You as I have said can always refinance, but once you have over paid you will have always over paid.

7/11/2006 04:12:00 PM  
Blogger BergenBuyer said...

Folks,

I put together this survey last week to get an idea of what everyone thinks the NNJ housing market will do in the next few years. I've only had 10 responses, so I'm posting again:

http://www.zoomerang.com/survey.zgi?p=WEB225G72ZZ53H

I'll post the results after we get some more responses, or if 10 is all we get, I'll post that.

Regards,

BergenBuyer

7/11/2006 04:18:00 PM  
Blogger grim said...

Some interesting news from William Lyons Homes..

William Lyon Homes Reports New Home Orders, Closings And Backlog

Exposure is Arizona, California, and Nevada..

William Lyon Q2 cancellation rate 32% vs 13% - MarketWatch.com
William Lyon Q2 home closings 768 vs 619 - MarketWatch.com
William Lyon Q2 backlog 1,139 vs 2,115 - MarketWatch.com
William Lyon Q2 new home orders 550 vs 1,154 - MarketWatch.com

7/11/2006 04:34:00 PM  
Anonymous Anonymous said...

polish/ Polish

Totally baffled by a simple change in capitalization, I was.

You of Polish ancestry picked up on what a Wop wouldn't.

Pat

7/11/2006 07:07:00 PM  
Anonymous Anonymous said...

gsmls - 31,673

another 100 added today.

7/11/2006 07:19:00 PM  
Blogger chicagofinance said...

Anonymous said...
polish/ Polish
Totally baffled by a simple change in capitalization, I was.
You of Polish ancestry picked up on what a Wop wouldn't.
Pat
7/11/2006 08:07:18 PM

Without Papers does offend me. What is the matter with you!?

Though not ethnically Italian, my dad was brought up in Italy. I assume you must be a World Cup champion to use the term so cavalierly.

7/11/2006 08:55:00 PM  
Anonymous Anonymous said...

Chicago..

Proud of my paternal heritage. I would never offend a Frenchman...

AND THEN ADMIT IT!

Anyway, I'm a little disappointed that the neighborhood actually wasn't acquiring a bit more polish, after all.

I like Queens.

Pat

7/11/2006 09:28:00 PM  
Blogger chicagofinance said...

As Run-DMC once said "...from Queens come Kings..."

7/12/2006 09:08:00 AM  
Blogger Mr. Oliver said...

And as Chuck D said,

1989 - a number,
Another sucker.
Sound of the funky drummer.

No reason to submit this but for the fact that Chi started kicking it old school and I had to get my $.02 in.

7/12/2006 09:32:00 AM  
Blogger chicagofinance said...

"...get up, get, get, get down...911's a joke in yo' town..."

I can't be the only guy that thinks "Back In Black" is a Whodini album first, AC/DC second.

7/12/2006 10:30:00 AM  
Blogger Mr. Oliver said...

Chi, you are killing me today.

As far as I am concerned Back in Black is, and always will be, an AC/DC album. I guess this stems from growing up on Lawn Guyland in the mid-80s. Hard rock and heavy metal ruled the day.

However, my wife has gotten me very into old-school hip-hop. I'm discovering music I should have 20 years ago. Tribe Called Quest and Black Sheep are both in constant rotation these days.

"Who's the black sheep?
Where's the black sheep?"

Please tell me we are not the only two people getting these references.
Have a safe trip.

7/12/2006 11:45:00 AM  

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