Experts welcome expected decline in home sales

Home sales will decrease in number this year, and that's good news, according to top real estate analysts.

That seemingly conflictive view that "less is better" is even expressed by representatives of organizations representing real estate brokers. They point to the need of moderating sales activity to produce a more normal and healthy real estate market.

"We don't need to break a sales record every year for the housing market to be good," said David Lereah, chief economist for the National Association of Realtors. "In fact, cooling sales are necessary for the long-term health of this vital business sector.

"A modest slowdown in home sales this year, coupled with improvements in housing inventory, means the market is in the process of normalization. That will help bring balance between both buyers and sellers — yet sales will remain historically strong."
After setting a fifth consecutive annual record, reaching about 7.1 million sales units last year, existing-home sales are forecast to ease by 4.4 percent, to about 6.8 million units this year. That would still be the second-highest activity on record.

New home sales that reached about 1.3 million units last year are expected to decline by about 6 percent, to 1.21 million this year. This would also be the second-best year in history for new home sales. There were about 2.07 million home construction starts last year — the greatest number of starts since 1972. That volume is predicted to decline by about 6.6 percent this year.

As for resale home prices, they are projected to rise by about 5 percent (nationally) this year, a normal rate of price increases. Last year, prices increased by nearly 13 percent. Newly constructed home prices are expected to increase by 6 percent this year, according to NAR analysts.