The National Association of Realtors is forecasting lower mortgage interest rates into 2009 even though its index of pending home sales has been relatively stable.
According to a release Tuesday, the NAR Pending Home Sales Index slid down just 0.7 percent in October from the previous month and down 1.0 percent from October 2007. The index is based on signed sales contracts and is an indicator of future sales.
“Despite the turmoil in the economy, the overall level of pending home sales has been remarkably stable over the past year, holding in a generally narrow range,” said Lawrence Yun, NAR chief economist. “We did see a spike in August when mortgage conditions temporarily improved, which underscores two things – there is a pent-up demand, and access to safe, affordable mortgages will bring more buyers into the market.”
Regionally, pending home sales were up by 7.8 percent in the South and by 0.6 percent in the Northeast, but those increases were offset by a 4.3 percent decline in the Midwest and an 8.7 percent drop in the West. Still, pending sales in many parts of the country, including the West, are on the rise compared with year-ago figures.
According to a release Tuesday, the NAR Pending Home Sales Index slid down just 0.7 percent in October from the previous month and down 1.0 percent from October 2007. The index is based on signed sales contracts and is an indicator of future sales.
“Despite the turmoil in the economy, the overall level of pending home sales has been remarkably stable over the past year, holding in a generally narrow range,” said Lawrence Yun, NAR chief economist. “We did see a spike in August when mortgage conditions temporarily improved, which underscores two things – there is a pent-up demand, and access to safe, affordable mortgages will bring more buyers into the market.”
Regionally, pending home sales were up by 7.8 percent in the South and by 0.6 percent in the Northeast, but those increases were offset by a 4.3 percent decline in the Midwest and an 8.7 percent drop in the West. Still, pending sales in many parts of the country, including the West, are on the rise compared with year-ago figures.
Possible government programs could improve the situation, according to NAR President Charles McMillan. “Efforts to bring down mortgage interest rates demonstrate a clear understanding of the role housing plays in stabilizing the economy,” he said. “We’re very encouraged by all of the proposals getting serious consideration in Washington to help home buyers. More sales will stabilize home prices by bringing down inventory, and would lessen foreclosure pressure.”
Yun agreed. “Given the critical role of housing in an economic recovery, we’re confident sufficient stimulus will be offered to bring more buyers to the market,” he said.
The NAR expects existing home sales to top out at 4.96 million this year, followed by an increase to 5.19 million in 2009 and 5.55 million in 2010.
Based on these forecasts and predictions of U.S. economic growth, the NAR believes 30-year fixed rate mortgage interest rates will fall to 5.6 percent in the first quarter before rising to an average of 6.0 percent by the last quarter. The rate will likely grow to 6.2 percent in 2010.
Yun agreed. “Given the critical role of housing in an economic recovery, we’re confident sufficient stimulus will be offered to bring more buyers to the market,” he said.
The NAR expects existing home sales to top out at 4.96 million this year, followed by an increase to 5.19 million in 2009 and 5.55 million in 2010.
Based on these forecasts and predictions of U.S. economic growth, the NAR believes 30-year fixed rate mortgage interest rates will fall to 5.6 percent in the first quarter before rising to an average of 6.0 percent by the last quarter. The rate will likely grow to 6.2 percent in 2010.
by Alice Keith
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