The National Association of Realtors is forecasting that existing home sales will hit 5.3 million units in 2011, up 8% from last year. But back in September, NAR economists were projecting a 10.7% increase in sales.
The less optimistic outlook comes even though NAR's gauge of future home sales has registered gains in five of the last six months.
On Thursday, NAR reported its pending sales index (PSI) rose 2% in December — the third consecutive monthly increase.
However, the PSI is still 4.2% below the 97.8 mark set in December 2009. The seasonally adjusted index is based on newly signed contracts on existing homes that should go to closing in a month or two.
The pending sales index rose to 93.7 in December from 91.9 in November. During 2010, NAR's index hit a high of 110.9 in April.
"The latest pending sales gain suggests activity is very close to a sustainable, healthy volume of a mid-5 million total annual home sales. However, sales above 6 million, as occurred during the bubble years, is highly unlikely this year," said NAR chief economist Lawrence Yun.
