Realtor Group Cuts 2007 Forecasts; Existing Home Prices to Fall
The national median existing-home price is expected to slip 0.7% to $220,300 this year, the National Association of Realtors said. A decline would be the first since the NAR started tracking home prices in the late 1960s.
Tougher lending standards that will follow the current subprime mortgage crisis will slow the U.S. housing market's recovery, the trade group said.
"Higher loan standards will slow the housing recovery," the NAR said.
Subprime borrowers with damaged credit have recorded higher delinquencies and foreclosures in recent months. As a result, investors have drained the subprime market of capital while regulators and lawmakers mull tougher lending standards.
That contraction ultimately will help the housing market, the trade association said.
"Tighter lending criteria and fallout from the subprime loan debacle will lead to a healthier housing market with greater assurances that owners can handle mortgage adjustments," the group said in its statement.
The median new-home price should increase 0.4% to $246,200 this year after gaining 1.8% in 2006.
The NAR lowered its home sale outlook for the year. Existing home sales are likely to total 6.34 million in 2007, the group said today. Last month, the group said it saw sales of previously owned homes hitting 6.42 million.
New homes sales should hit 904,000 this year, the group said Wednesday. Last month, it said new homes sales should hit 950,000 for the year.