For Immediate Release:

RISMEDIA,  The outlook for housing and the economy appears headed for a sustainable recovery, according to the National Association of Realtors®.

Lawrence Yun, NAR chief economist, said the projections are enhanced by a tax credit expansion to more home buyers through the middle of 2010. “Given the success of the first-time buyer tax credit to date, and the need for qualified buyers to continue to absorb inventory that will include additional foreclosures over the coming year, we are hopeful about the impact of the expanded tax credit because it will stabilize home prices,” he said. “In fact, the credit is working better than first projected – it now looks like we’ll have 2.3 to 2.4 million first-time buyers this year.”

Existing-home sales are expected to total 5.01 million, a gain of 2.0% over last year, and then are forecast to rise 13.6% to 5.69 million in. “A steady draw down of inventory will help home values to turn positive but risks such as unemployment remain in the economy,” Yun said.

New-home sales are projected at 397,000 this year, recovering to 549,000. Housing starts, including multifamily units, should total 564,000 units this year but grow to 752,000.

The 30-year fixed-rate mortgage will probably average 5.3% in the fourth quarter, rising gradually to 5.8% by the end of next year. NAR’s housing affordability index will set a record, averaging 30 percentage points higher. Affordability will decline from record highs next year but will remain at historically attractive levels for home buyers.

“We’ve seen a steady downtrend in housing inventory for well over a year and home prices appear to be in the early stages of stabilizing. With the expansion of the tax credit to additional buyers through the middle of next year, and no major unforeseen events impacting the economy, home prices should rise between 3 and 5% but with wide geographic differences,” Yun said. He expects growth in the U.S. gross domestic product to be at a pace of 2.5% in the current quarter, with GDP up 2.8%.

The unemployment rate is close to peaking and is projected to ease to 9.5% by the end of next year.

“The size of the U.S. budget deficit is a concern going forward, and carries the risk of higher inflation. At this point, that risk appears to be restrained,” Yun said. Inflation, as measured by the Consumer Price Index, is seen contracting 0.4% this year, then rising 1.6%. Inflation-adjusted disposable personal income is estimated to grow 0.4% this year and 1.2% next year.

For more information please contact Heather Ryker-Milling at 973-534-3065 or 908-852-7659.