Forecast Calls for Rain...but Subprime is on the Mend

Here's what NAR has to say about this years market:

Soft, But Shaping Up

Although the market is relatively soft now, home sales activity is expected to show a gradual upturn by the end of the year, according to NAR. Existing-home sales are projected to total 6.18 million in 2007 and 6.41 million next year, in contrast with 6.48 million in 2006. The national median existing-home price should ease by 1.3 percent to $219,100 in 2007 before rising 1.7 percent next year. Lawrence Yun, NAR’s senior economist, reminded buyers that housing is a long-term investment. “Those who are looking for a get-rich-quick scheme are likely to be disappointed,” he said. “Over time, investing in a house will help to build a nice nest egg, especially for buyers using a traditional mortgage instrument that reduces debt,” Yun added.

Pending Sales Are Down, But Subprime Woes are Subsiding

NAR's Pending Home Sales Index dropped to 101.4 in April, down 10.2 percent from a year ago and 3.2 percent below the March index. The index was down in all regions but the South, where it crept up a slight 0.7 percent from March to April. Lawrence Yun, NAR’s senior economist, said the impact of subprime lenders shutting their doors appears to be diminishing and mortgage applications have risen in the last month. “This tells us that some borrowers who originally planned to finance with subprime mortgages are finding suitable loans in the conventional market, which will help to stabilize home sales,” he said.

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It will be interesting to see what shakes down in our market. The past couple of years the "Fall Market" hasn't really had a lot of punch. If it is busier than normal that could mean we are in for quite a rebound in the Spring of '08.