Home Sales Expected to Continue Decline Well Into Next Year

[Oct 22, 2008.]

 

The housing market isn’t expected to improve until the second half of 2009, according to the Mortgage Bankers Association (MBA). Sales of new houses are expected to post a drop of 36% this year and decline another 12% in 2009. The MBA said it expects home sales to rise 25% in 2010.

“We expect residential investment to decline further through the first half of 2009, due to the excess supply of houses and weakened demand from the recession,” Jay Brinkmann, the MBA’s chief economist and senior vice president for research and economics, said in a statement.

Brinkmann said he expects more job losses and predicted the unemployment rate would rise to as high as 7.7 percent by the end of next year. And many people who owe more than their homes are worth will continue to be stuck – and may see their home values take further hits. That could continue to push up the foreclosure rate as more people find they can’t afford to stay in their homes.

Lawmakers have been urging the government to do more to help homeowners stay in their homes. The Treasury has the authority to buy individual mortgage loans under the $700 billion rescue plan. And Treasury Secretary Ben Bernanke told Congress that the country needs a stimulus package to give the economy a boost.

However, mortgage interest rates seem to be on the decline so people who are able to obtain mortgage loans will benefit. Rates on 30-year, fixed-rate mortgages averaged 6.28 percent last week, compared with 6.47 percent the previous week, according to MBA. But even though mortgage rates are more favorable for home buyers, the number of people applying for mortgage loans is down. That’s mainly due to a 23.5 percent drop in refinancing activity, compared with a week earlier.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.