Projected growth in new home sales wouldn’t offset expected drop in existing home sales
The level of existing home sales in July exceeded forecasts, but Fannie Mae economists predict that home buyer demand will slow for the rest of this year and next, due to the limited number of homes available on the market.
The economists at Fannie Mae have updated their latest monthly forecast and now predict home sales will rise by 3.3% this year, to 6.68 million homes, up from their previous forecast of 3.1% growth.
Sales of existing homes saw a slight increase of 2% in June-July, contributing to the higher than expected forecast for this year’s sales.
Fannie Mae economists maintain that sales pace may not be sustainable because for-sale inventories are at low levels, new listings aren’t coming on the market quickly enough to meet demand, and new listings aren’t being created quickly enough.
According to Fannie Mae, next year sales of new and existing homes are expected to drop by 1.9%.
New home sales are expected to increase in 2013, but not enough to compensate for a decrease in existing home sales.
Purchase mortgage applications and pending home sales point to a near-term softening, with the annual pace of existing home sales expected to drop to 5.7 million homes by the end of the year, according to the Federal National Mortgage Association (Fannie Mae).