Housing Sales Set for Soft Landing Mode
May 1, 2006,
With interest rates rising and demand showing some signs of eroding, the nation's housing market sent out mixed signals during March, telling a story that sounded like, “On the one hand … but then on the other.”
Putting the number into perspective, even with the run-up of more than 13% over last month, sales of new homes were still down by 11.5% from July of last year, when the housing boom was at its zenith.
Elsewhere, the market was more muted, with housing starts falling by 7.8% and sales of existing homes — by far the largest segment of the market —virtually flat, edging up just 0.3%.
David Lereah, chief economist of the National Association of Realtors, said sales of existing homes are leveling off. Still, he said, with sales levels holding close to the month before, “this is additional evidence that we're experiencing a soft landing. We may see some minor slowing in home sales as interest rates rise, but the market clearly is stabilizing.”
In a further sign of calming, home prices are off their earlier torrid pace, he said. “We now see appreciation cooling to single-digit rates of price growth — another sign that the market is normalizing.”
Housing By Region
Month-To-Month % Change, March 2006
|EXISTING HOME SALES||HOUSING STARTS||NEW HOME SALES|
|Source: U.S. Department of Commerce and National Association of Realtors