Realtors Update Housing Forecast

Existing-home sales will be off 6% this year from last year's record pace and new-home sales will fall by 10.9%, according to the National Association of Realtors.Strong economic growth and hiring are having an offsetting effect on rising mortgage rates, and home sales should "stay at a high plateau" for the remainder of the year, said NAR chief economist David Lereah. The NAR economist said he expects the 30-year mortgage rate to end the year at 6.9%. Meanwhile, Freddie Mac economists are projecting that a flat or inverted yield curve will keep the 30-year mortgage rate at 6.5% by year's end, with new- and existing-home sales declining by 7% from last year's record high. Single-family mortgage originations are forecast to decline by 13% to $2.45 trillion, as the share of refinancings and adjustable-rate mortgages remain at high levels. Demand for interest-only and payment-option mortgages will keep the ARM share at 27% of originations in 2006, down from 31% in 2005, according to Freddie's updated forecast. The refinancing share will drop to 36%, compared with 44% of originations in 2005. The NAR can be found online at http://www.realtor.org, and Freddie Mac can be found at http://www.freddiemac.com.