The housing market should see a modest recovery in 2012, with a modest rise in sales and home prices, according to a new forecast from the National Association of Realtors (NAR).
Existing-home sales are predicted to rise 4-5 percent from this year's expected total of 4.96 million, according to the NAR, with an unspecified rise in median home prices. Double-digit gains are expected for both new home sales and construction starts, though activity in those areas is still expected to remain weak by historical norms.
Pent-up demand seen
The NAR expects that underlying forces in the housing market and economy will eventually start to assert themselves, overcoming the negative factors that have held the market in check until now.
"Tight mortgage credit conditions have been holding back home buyers all year, and consumer confidence has been shaky recently," said Lawrence Yun, NAR chief economists. "Nonetheless, there is a sizeable pent-up demand based on population growth, employment levels and a doubling-up phenomenon that can't continue indefinitely. This demand could quickly stimulate the market when conditions improve."
The forecast is based in part on NAR expectations that gross domestic product will increase by 2.2 percent next year, up from 1.8 percent in 2011, and that unemployment will fall to 8.7 percent, down from 9.0 percent currently, with about 2 million new jobs created.
Prices, mortgage rates expected to rise
A falling inventory in homes available for sale is expected to produce a moderate rise in home prices, according to the NAR, although prices have yet to fully stabilize in most areas.
New home sales are forecast to rise to 372,000, still low by historic standards, but up from 302,000 in 2011, which will be the lowest total in at least 60 years. New home construction is expected to rise to 630,000 units, up from 583,000 this year.
On the downside for consumers, mortgage interest rates are expected to rise to about 4.5 percent on 30-year fixed-rate mortgages, up about half a percentage point from current levels but still well below historical norms.
Reported by MortgageLoan.com (11/14/11)
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