Coming into 2007 the home building industry's leading economists were projecting that the downturned market would begin its comeback by the middle or end of the calendar year. Then they adjusted their estimates to incorporate the massive over-supply of new homes on the market, then adjusted estimates again when the subprime mortgage crisis came to the fore.
By the end of 2008 or early 2009, the market downturn will be over, most economists are now saying. But already one industry optimist, the National Association of Realtors (NAR), is suggesting a turnaround far sooner than that.
In a report released May 15, Lawrence Yun, NAR senior economist, claims the existing-home sales market is stabilizing and that a gradual recovery “should start in the second half of this year.”
This is in stark contrast to what many industry experts and economists foresee, which is a prolonged period of falling prices for both new and existing homes and pricing power not returning until late 2008 or even into 2009.
Pat Combs, NAR president, is even bolder. “It appears the worst of the price correction is behind us,” Combs says in the report. “More stable home prices and declining mortgage interest rates are increasing buying power.”
While the NAR's sales price data suggests that the median sales price for existing homes increased to $217,000 in March from $210,900 in January, the S&P/Case-Shiller Home Price Index shows existing-home sales price decreases from January to February. March data had not been released at press time.
In his May 17 report, Dave Seiders, NAHB chief economist, offers a far bleaker—some might say more realistic—view. Seiders notes that home buyer demand is weakening in the face of tightening lending standards. He also sees “flagging confidence among prospective buyers about the prospects for house prices.”
Will the market rebound in 2007? In a few select markets, maybe. Will it rebound nationally in 2008 or by early 2009? Stay tuned.