Realtors: Home prices may fall for 1st time since 1993
Glut of inventory to give buyers a boost, industry group says
US home prices may fall for the first time since 1993 as a record number of homes for sale gives buyers the upper hand in negotiations, the National Association of Realtors said.
``We'll probably see prices dip temporarily below year-ago levels as the market works through a buildup in housing inventory," David Lereah , NAR's chief economist, said in a report released yesterday in Washington by the real estate industry's largest trade group. He didn't provide a monthly median estimate.
The inventory of new and existing homes for sale has swelled to record levels as the five-year US housing boom comes to an end. KB Home, the number six US home builder by stock market value, on Wednesday lowered its 2006 earnings forecast after quarterly orders plunged and Hovnanian Enterprises Inc., the number 10 builder, reported profit fell 34 percent. Yesterday , Beazer Homes USA Inc., number 12, lowered its forecast after orders fell by half.
Short-term housing investors, so-called ``flippers," are putting their properties up for sale, making for ``an increasingly challenging housing market," KB Home chief executive Bruce Karatz said in a statement Wednesday that detailed the builder's 43 percent drop in new orders.
``People who purchased last year with the intent of flipping are likely to get burned," Lereah said in the NAR report.
The last time the monthly US median price for an existing home fell below the year-ago level was February 1993, when it dipped 1.1 percent. On Sept. 25, the group will report existing home prices and sales, which represent about 85 percent of US housing sales. The Commerce Department will report new-home prices and sales on Sept. 27.
The Federal Reserve said Wednesday in its regional survey that housing markets and home construction weakened nationally, and the slump could deepen.
Lereah said the median price of new homes probably will rise 0.2 percent on an annualized basis in 2006, the worst performance since prices fell in 1991 . The median price for an existing home probably will gain 2.8 percent, the slowest rate since 1992, according to NAR data.