Forsale Housing Market May be Bottoming, Says NAR Research Official

By Anuradha Kher, Online News EditorWashington, D.C.–The level of home sales, including multifamily, is expected to show little movement in the months ahead, according to the latest projections by the National Association of Realtors (NAR).The Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, fell 3.2 percent to 86.5 from an upwardly revised reading of 89.4 in June. The July index remains 6.8 percent below July 2007 when it stood at 92.8.“Sales in some months are down and in others, they are up, but the overall market is stable with nearly five million sales this year,” managing director of quantitative research, Jed Smith, tells MHN. “The market found its bottom and now things are about to go up.”In the multifamily sector, existing condo and co-op prices for the overall market for one year as of July 2008 are down 2.7 percent. “But in the Northeast and Midwest they are up 3.9 and 2.2 percent respectively. There are significant disparities and this is because the West and the South are going through a market correction. On the other hand, the Northeast and Midwest did not go through the overheating of prices and both regions are therefore stable.”Condo and co-op sales meanwhile are 18.6 percent down overall and have significant decreases in each of the regional markets. “This is consistent with the national housing market,” says Smith.The mood in the multifamily sales market is turning around. “This is because prices in several markets have gone down and there is a steady stream of construction,” says Smith, noting  that buyers are still being cautious. NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., says there’s been a surge in FHA mortgage applications. “Unfortunately, many people in high-cost areas aren’t familiar with FHA programs, which is why we produced a toolkit so Realtors, lenders, and other real estate professionals can familiarize themselves with this increasingly valuable program,” he explains. Smith says, “Even with the Treasury Department’s direct intervention in the secondary mortgage market, it is unclear if we will go back to sound normal underwriting criteria, or if it will remain overly stringent. The housing market outlook is very cloudy.” New-home sales will total about 508,000 in 2008 and 463,000 next year, down significantly from 775,000 in 2007. With builders motivated to clear inventory, housing starts, including multifamily units, will probably fall 17.1 percent in 2009 to 801,000 units from 966,000 this year. The 30-year fixed-rate mortgage, which also has been moving up and down, should trend up to 6.6 percent by the end of this year, edging up to 6.7 percent in 2009, according to NAR.