NAR turns more pessimistic on housing

Yesterday's forecast from The National Association of Realtors for July was more pessimistic in nearly every aspect than June. The main points were:

• Housing starts are expected to drop 20.6% in 2007 and rise 0.6% in 2008. Starts for single-family homes are expected to fall 23.3% this year and 1.3% next year. A month ago, the Realtors were expecting single-family starts to rise 1.6% in 2008.

• Sales of existing homes are expected to fall 5.6% this year and rise 4.2% next year. Sales of new homes are expected to fall 17.7% this year and rise 1.4% next year.

• Total spending on residential construction is expected to fall 14.2% this year and rise 1% next year.

• The median sales price of an existing home is expected to fall 1.4% this year and rise 1.8% next year. The median sales price of a new home is expected to fall 2.6% this year and rise 2.2% next year.

One of the most interesting aspects of the report was the title the NAR gave to it. Forever the optimists they labeled their July forecast "Home Prices Expected to Recover in 2008 As Inventories Decline" Personally I don't share their optimism. It will interesting to see if the NAR retain their optimism of price and volume rises in 2008 as we get closer to year end and the housing market continues to worsen.