Survey Sees 15.3% New-Home Sales Drop

Wall Street economists are forecasting a 15.3% drop in new-home sales in 2006 and a 5.6% decline in existing-home sales, according to a survey by The Bond Market Association."The housing sector is expected to cool from its blockbuster pace but still register solid gains in a higher interest rate environment," the TBMA survey says. Members of TBMA's economic advisory committee expect new single-family sales to drop from a record 1.3 million this year to 1.1 million in 2006. They see resales declining from a record 7.1 million to 6.7 million next year. On the other hand, the National Association of Realtors is forecasting a 4.8% drop in new-home sales and a 3.7% drop in resales in 2006. "The slowdown amounts to a tapping of the brakes on a hot market," NAR chief economist David Lereah said. TBMA and NAR forecasts have the 30-year mortgage rate reaching 6.6% in the second half of 2006. However, the NAR projects that gross domestic product will grow by 4.1% in 2006, while the TBMA economists are predicting 3.6% GDP growth.