Housing Market Outlook could Predict Foreclosures

The prices and sales of existing homes for sale are continuing to drop, and it is too soon to predict when the housing market will turn around, according to housing analysts. Reports showed that the sale of existing single family homes fell by 1.6%  in May after a short surge in April. New home sales have dropped every month since January, as are new home prices. Prices for new homes are .9% lower than they were in April 2006, with the current median home price being $236,100. Existing home sales have dropped .3% since last May, and the average home price dropped 2.1% from May 2006. This has been the 10^th month that existing home sales have continually declined. With home sales decreasing, homeowners who are needing to sell their homes, forcing more to face foreclosures. According to the National Association of Realtors, inventories of existing and new homes that are on the market are at the highest level in 15 years-they just aren’t selling. The NAR believes that existing home sales will fall by 4.6% in 2007 which is worse than its prior forecasts of only a 2.9% drop in 2007. NAR believes that the median home price will fall by 1.3% in 2007, which is the first decline on record. Along with growing inventories of unsold homes, the real estate market is feeling the effects of rising interest rates. Rising interest rates will likely lead to another drop in the market, and possibly put more pressure on home sales and prices over the rest of the year. As realtors always say, location means everything, and it still stands true with the slowing housing market-new home sales in the South have fallen 7.3% in May, and fell even more in the North-11%. New home sales fell by 1.9% in the West…the only increase in new home sales was in the Midwest, where they jumped by 30.8%. Many are starting to ask the question: How long before the housing market hits bottom? The answer depends on so many things that of course, there isn’t a simple answer. It depends on the economy and if it continues to hold up, which would provide jobs, that would enable buyers to afford mortgage payments. As of right now, the economic outlook is good, as the economy has been picking up since the first quarter of the year. A majority of homeowners are waiting out the housing slump and will put their homes on the market when it picks up. However, if the market does not pick up when expected, more foreclosures could be one the horizon.