In 2006, there is no sign that the real estate market bubble will burst. Analysts at the National Association of Realtors say that this year is now on track to be the second best year ever for home sales. "Home sales are coming down from the mountain peak, but they will level off at a high plateau," said David Lereah, NAR's chief economist. "This plateau is higher than previous peaks in the housing cycle." "It's good that the market is moving toward a more normal and balanced state."
Even though mortgage rates have been going down over the past few weeks, NAR predicts that they will go up overall this year, most likely to about 6.6% for a 30-year fixed-rate mortgage. When the final numbers for 2005 are in, it is expected that sales of existing homes will reach about 7.1 million units. In 2006, sales are likely to go down a bit, maybe by 3.7%, to 6.84 million units. In 2005, about 1.29 million new homes will be sold, and this year, sales are likely to drop by 4.8% to 1.23 million. That would make this the second-best year ever for sales of new homes.
The head of the National Association of Home Builders, Dave Wilson, said, "The housing market is still fundamentally healthy." "Many builders think that buyers are becoming less interested because of high prices and rising interest rates. As a result, many companies have started to offer incentives to keep sales and production going." NAHB says that home builders' confidence dropped in December from its high point in the summer, but it was still well within the positive range.
"Real estate has always been the best investment for most families," said Thomas Stevens, president of the NAR. An old saying says that having your own home is better than having a drawer full of rent checks.
