Economists See Home Sales Bottom This Year

The National Association of Business Economists says it expects home sales to bottom out this year, but the professional forecasters also see a significant decline in house prices. The 52 NABE respondents said they expect the Office of Federal Housing Enterprise Oversight's house price index to drop 4.8% in 2008 and edge down by 0.3% on 2009. The OFHEO HPI rose 0.8% in 2007 and the home-purchase-only index fell 0.3%. Meanwhile, the forecasters were evenly divided on whether home sales will bottom out in the second, third, or fourth quarter. They also expect a slow recovery in housing, with housing starts rising from 990,000 in 2008 to 1.12 million in 2009. "While our panel anticipates an improvement in credit markets and a bottoming out in housing this year, the forecasters have marked down their estimates of growth for both 2008 and 2009," NABE president Ellen Hughes-Cromwick said. The economists expect gross domestic product to grow at a 2.1% annual rate in the second half of this year and 2.7% in 2009.