It is predicted that the average price for a home resale will increase 3.4% to $233,000 next year. This would reflect an increase of 1.5% over this year's pace. The pace was at 1.1% in 2006 and 12% in 2005, which marked the end of a 5-year housing boom.
NAR states that these growth figures show that overall the housing market has avoided a complete crash. In spite of growth being lower that the averages, home sales illustrate what is being described as a "soft landing." Resales of homes are expected to grow to 6.58 million units this year.
It is foreseen that a turn around of the market will not occur until home buyers have less inventory to choose from. The current available inventory simply needs to be absorbed.
As of November, 2006 the length of time that it would take to sell off current inventory levels stands at 6.3 months. This is up from 4.9 months in 2005, yet also down from 7.2 months in July of 2006. (Information provided by U.S. Commerce Dept.)
The United States economy is expected to expand at a rate of 3.2% in 2008, which would show an increase from the expected 2.5% this year. The average rate on a 30-yr fixed mortgage is expected to be at 6.6% in 2008, which would match 2007 rates. In 2006 the rate was at 6.4%.
The growth rate of homes in the U.S. has shown an average growth rate of 5% during the previous 50 years.
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