Record New, Existing Home Sales Expected
Both new and existing home sales in 2005 are poised to break records, according to revised forecast from the National Association of Realtors.
Based on July trends, NAR said existing home sales should rise 2.8 percent to 6.97 million this year. That's an upward adjustment from last month's forecast when NAR was expecting 6.89 million sales. The market reached a record 6.78 sales in 2004.
The new home sales pace in July was 3.2 percent more than last year indicating 1.24 million sales by year's end, also a new record. Housing starts -- single-family and multi-family combined -- are forecast to grow by 5 percent to 2.05 million units, the second highest on record. The market peaked at 2.36 million in 1972.
Single-family home construction should break another record, reaching 1.68 million homes.
NAR says the national median existing home price for all housing types should rise by 9.4 percent to $202,600, with the new home price increasing 5.8 percent to $233,900.
"Earlier this year, we expected 2005 home sales to be the second-highest on record, but monthly sales have been at or near record levels. Although we should come off of sales peaks in the months ahead, mortgage interest rates have remained lower than expected, and job gains are providing additional stimulus, meaning unprecedented sales totals this year," said David Lereah, NAR's chief economist.
Recipe For Bubble Pop Missing Key Ingredient
One of the reasons forecasts for a housing market collapse are falling flat is because a key ingredient is missing from the recipe for Hot Bubble Turn Over.
Beginning more than a half decade ago, forecasts began warning of a housing bubble on the verge of popping, in part, they said, because home owners were biting off more than they could chew in a housing market yeasty with appreciation.
Full of unaffordable homes, the market was supposed to belch up foreclosures and it wasn't going to be pretty.
The vast majority of home buyers, however, have had their cake and they continue to eat it.
Both mortgage delinquencies and foreclosure rates are down, not up.
The percentage of delinquent residential mortgages was 4.31 percent in the first quarter this year, down from 4.46 percent a year ago. Likewise foreclosures dipped to 0.42 percent at the end of the first quarter, down from 0.47 percent a year ago, according to the Mortgage Bankers Association.
Apparently, the same low mortgage interest rate factor that's helping drive the hot housing market, has also given home owners the opportunity to refinance to cheaper loans that help them keep their household budgets out of the frying pan.
Slow, but steady economic and job growth adds flavor to favorable conditions served up with appetizing interest rates, said Douglas Duncan, MBA's chief economist.
"These expectations likely mean we will continue to see moderate declines in delinquencies for the next few quarters," he added.
It all gives new meaning to "seconds anyone?"
Mortgage Demand Remains Hot
Demand for mortgages increased 1.5 percent the week ending July 15, as interest rates remained at attractive levels for home buyers and owners refinancing mortgages.
Refinancing activity climbed 2.5 percent, the week ending July 15, offsetting the 0.1 percent decline in loans originated for home purchases, according to the Mortgage Bankers Association.
Refinancings also increased as a percentage of all mortgage applications, rising to 45.7 percent, up from 45.1 percent in the previous week.
The adjustable rate mortgage (ARM) percentage of total applications also rose from 27.9 percent to 28.5 percent, MBA reported.
Garages Not Just For Cars
Nearly two-thirds of all new homes have two-car garages while 19 percent have three-car garages, leaving only about 15 percent with one-car garages or none at all, according to the National Association of Home Builders.
The more-is-better garage trend is most prevalent in areas where houses do not traditionally have basements, indicating home owners don't just park cars there. NAHB studies of consumer preferences consistently show that extra storage space is very high on most consumers' wish lists.
The West and Midwest are the three-car garage leaders, according to U.S. Census research. In 1992, when the bureau first started nosing around about garages, only 16 percent of new Midwest homes were equipped with three-car or larger garages. Last year, the number was up to 32 percent. In the West, the larger garages were built into 20 percent of the new homes in 1992. By 2004, it was 31 percent.
In the South, the percentage of homes with big car garages is currently only 9 percent, 10 percent and in the Northeast.