By Rex Nutting
RISMEDIA, July 13, 2007—(MarketWatch)—Construction of single-family homes will probably decline for a third straight year in 2008, according to the latest monthly forecast from the National Association of Realtors.
The group’s July forecast, released Wednesday, is more pessimistic than its June forecast in nearly every aspect.
“With profit margins coming under pressure, homebuilders will limit new construction well into 2008,” said Lawrence Yun, senior economist for the NAR, in a press release.
“This should help the overall inventory level to move steadily into a more balanced state.”
Housing starts are expected to drop 20.6% in 2007 and rise 0.6% in 2008, Yun said. 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.
The Realtors’ press release was headlined “Home prices expected to recover in 2008 as inventories decline” — even though the forecast median price for existing homes in 2008 was unchanged from last month’s at $222,700.
Rex Nutting is Washington bureau chief of MarketWatch.