Jan
01

Prediction: The Housing Market Will Improve Next Year

January 01, 2011

Pending home sales for November rose to the highest level in seven months, which has experts predicting a gradual recovery going into 2011.

The National Association of REALTORS on Thursday released its Pending Home Sales Index to show that contracts signed on existing homes in November increased 3.5 percent to 92.2.

fortune cookie that says 2011 will be a great yearWhile this is still 5 percent below its 97.0 level in November 2009, economists had only expected pending home sales to rise by 1 percent in November, so this is good news.

“In addition to exceptional affordability conditions, steady improvements in the economy are helping bring buyers into the market,” said Lawrence Yun, NAR chief economist. “But further gains are needed to reach normal levels of sales activity.”

NAR projections for 2011:

*The 30-year fixed-rate mortgage could rise gradually to 5.3 percent by the end of the year.

*Existing-home sales could rise about 8 percent to 5.2 million in 2011 from 4.8 million in 2010.

*The median existing-home price could rise 0.6 percent to go from $172,700 in 2010 to $173,700 in 2011.

*The unemployment rate should drop to 9.2 percent by the end of next year.

*New-home sales are expected to rise 24 percent in 2011 to 392,000; housing starts could rise 21 percent to 716,000.

“If we add 2 million jobs as expected in 2011, and mortgage rates rise only moderately, we should see existing-home sales rise to a higher, sustainable volume,” Yun said. “Credit remains tight, but if lenders return to more normal, safe underwriting standards for creditworthy buyers, there would be a bigger boost to the housing market and spillover benefits for the broader economy.

“All the indicator trends are pointing to a gradual housing recovery.”

Categories: Economy, Featured

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Tracey

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[...] discussed before how the recovery of the nationwide and Chicagoland real estate market is directly connected to unemployment, so naturally we are happy to report that last month’s [...]

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