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Near-Term Home Sales to Hold in Modest Range
The housing market will probably hold close to present levels in the months ahead, NAR says.

Lawrence Yun, NAR senior economist, said he isn’t looking for any notable changes in sales activity. “Existing-home sales should be relatively stable over the next few months, holding in a modest range, with some pent-up demand growing from buyers who’ve been on the sidelines,” he said. “Mortgage disruptions will hold back sales over the short term, but long-term fundamentals are favorable. A modest upturn is projected for existing-home sales toward the end of the year, with broader improvement to include the new-home market by the middle of 2008.”

Existing-home sales are forecast at 6.04 million in 2007 and 6.38 million next year, below the 6.48 million recorded in 2006. New-home sales are expected to total 852,000 this year and 848,000 in 2008, down from 1.05 million in 2006. Housing starts, including multifamily units, are likely to total 1.43 million in 2007 and 1.40 million next year, below the 1.80 million units started in 2006.

“With the population growing, the demand for homes isn’t going away – it’s just being delayed,” Yun said. “More buyers, and cutbacks in new construction, will eventually draw down the inventory levels and support future price appreciation, but general gains will be modest next year. Serious buyers today have a long-term view of housing as an investment – speculators have left the market.”

Existing-home prices should ease by 1.2 percent to a median of $219,300 in 2007 before rising 2.0 percent next year to $223,600. The median new-home price will probably fall 2.3 percent to $240,800 in 2007, and then rise 2.3 percent next year to $246,300.
The 30-year fixed-rate mortgage is forecast to average 6.7 percent in the fourth quarter and then ease to the 6.5 percent range next year.

Growth in the U.S. gross domestic product (GDP) is projected to be 1.9 percent this year, down from a 2.9 percent growth rate in 2006; GDP is expected to grow 2.8 percent next year.

Source: NAR

Foreclosures Are Up, but Bargains Hard to Find
Real estate professionals specializing in foreclosures in California and elsewhere say business is brisk, but nowhere near what it was during the housing downturn in the 1990s. And bargains are hard to find.

During the second quarter of this year, foreclosures were nearly 10 percent of all resales, compared with just 1.7 percent a year earlier. But that's still off the peak of nearly 15 percent seen twice during the mid-1990s, according to DataQuick Information Services, which has been tracking real estate transactions since 1988.

DataQuick's analysis of recent sales found no pattern of foreclosure properties regularly selling for less than comparable homes.

"There may be some deals out there, but I'm not sure they're as many or as good as the perception," DataQuick analyst John Karevoll says.

A year ago, there was a much higher percentage of distressed properties selling at significant discounts, says Christopher Cagan, director of research and analytics for First American CoreLogic, a real estate information company. But things have changed as foreclosures have increased. “In general, the discounts right now are modest,” he says.

Source: The San Diego Union-Tribune, Lori Weisberg (08/05/2007)

Fed Holds Rates Steady, but Acknowledges Risk
The Federal Reserve held its benchmark interest rate steady at 5.25 percent for the ninth straight time on Tuesday, emphasizing that controlling inflation was its greatest concern, but acknowledging the risks of an unstable housing market.

It summed up its views on the issue succinctly in this policy statement:

"Financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing," it said.

"Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters, supported by solid growth in employment and incomes and a robust global economy."

After yesterday’s pronouncement, 13 of the 21 economists polled by Reuters believe that the Fed’s next move will be a rate cut because the Fed has acknowledged that there are some downside economic risks.

"This admission of risks to growth is a full baby step toward an equal risk position," says Brian Fabbri, managing director of economic research at BNP Paribas in New York.

Source: Reuters News, mark Felsenthal (08/07/2007)

Fed Holds Rates Steady, but Acknowledges Risk
The Federal Reserve held its benchmark interest rate steady at 5.25 percent for the ninth straight time on Tuesday, emphasizing that controlling inflation was its greatest concern, but acknowledging the risks of an unstable housing market.

It summed up its views on the issue succinctly in this policy statement:

"Financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing," it said.

"Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters, supported by solid growth in employment and incomes and a robust global economy."

After yesterday’s pronouncement, 13 of the 21 economists polled by Reuters believe that the Fed’s next move will be a rate cut because the Fed has acknowledged that there are some downside economic risks.

"This admission of risks to growth is a full baby step toward an equal risk position," says Brian Fabbri, managing director of economic research at BNP Paribas in New York.

Source: Reuters News, mark Felsenthal (08/07/2007