The National Association of Realtors has announced a lower prediction for U.S. home sales in 2006. Previously, the NAR had expected 2006 existing home sales to hit 6.62 million, but they have revised that prediction to 6.60 million for the year. Last year, the nation saw a record sales level of 7.08 million. The trade group predicts that new home sales will decrease by 13.4% to 1.1 million. Last year, 1.28 million new homes sold. The NAR had expected new home sales to hit 1.13 million for the year, but are now less optimistic. Many economists are still predicting that 2006 will be in the top five record years for housing, despite the falling market. The key is where the market is coming from -- record highs. It can still go down and be way above historic levels. The NAR predicts the average 30-year fixed mortgage rate to be at 6.9% for the second half of the year. The predicted national median existing-home sale price is expected to increase by 5.3% for the year to $231,000. Due to the reported vulnerability of the market, the NAR has requested that the Federal Reserve stop raising interest rates. "Experiencing a slowing from a hot market is a good thing because we need a solid housing sector to provide an underlying base to the economy, and slower appreciation will help to preserve long-term affordability," said David Lereah, the NAR's chief economist. "But this is a time for the Fed to pause on rate hikes because we have some interest-sensitive housing markets that have become vulnerable." |
