U.S. Home Prices to Fall in 2007; Buyers, Mortgage Applicants Take Note
Those contemplating the best time to apply for a mortgage loan and purchase, should consider the following report:
US house prices are likely to fall this year after the number of people selling their homes fell by the most in 17 years in 2006, according to a leading real estate broker.
Tom Kunz, chief executive of Century 21, predicted a slight fall in prices this year as figures from the National Association of Realtors on Thursday showed the pace of existing home sales slipped 0.8 percent last month.
The fall in home sales was sharper than expected and underlines the fragile state of the housing sector, reports MSN Money. But industry economists continued to predict a stabilization of the market this year following a protracted slowdown.
The national median price of existing homes was slightly higher than a year earlier, at $222,000, according to the industry association.
Mr Kunz predicted softening ahead: “Sellers have finally figured out that this is a buyers’ market. For too long they were hung up on the couple down the street that put their house on the market at $300,000 and got $350,000. But that is not going to happen anymore.”
“You are starting to see some price reductions. It is already happening in overheated markets like [the Florida housing market], California and Boston,” said Mr Kunz, who heads one of the country’s largest real estate companies.
The sharpest drop in purchases last month was in the West, where sales fell 9.1 percent, while they rose 4.3 per cent in the Midwest.
The industry association has launched a national advertising campaign to persuade Americans that this is a good time to buy, pointing to reasonable home mortgage rates, among other factors. but the Federal Reserve has warned that it continues to monitor the market closely.
Most industry analysts expect sales and construction activity to bottom out before the end of the year, and are forecasting either a slight fall or modest increase in prices.
However, many bank economists argue the outlook is very uncertain, as mortgage applications – a leading indicator of activity – remain volatile despite signs of wider economic growth.