NAR Cuts Housing Forecasts Again

The National Association of Realtors [NAR] on Tuesday cut its home sales and construction guidance for 2007 and 2008. This is the ninth time the organization has cut its home sales forecast this year. Existing home sales are projected to drop 8.6% in 2007, exceeding the 6.8% drop forecast last month. New-home starts are seen declining 24% this year and another 8% next year to their lowest since 1992; new-home sales are projected to fall 24% this year and an additional 7.4% next year to their lowest since 1995. The group expects the median resale price to slide 1.7% to $218,200 this year, which would be the first national decline since the Depression. A month ago, the NAR said new home sales should hit bottom at the end of 2007; now it is saying sales should continue to fall into Q1 2008. The group sees existing-home sales rebounding 5.8% next year, albeit 2% less than its August forecast. Some analysts believe that revised view remains too positive. "The Realtors keep splicing a little more off their outlook to make it more gloomy, but they are still more optimistic than we are," said Lehman Brothers economist Michelle Meyer. "The data from the mortgage and credit markets is all pretty dismal." The S&P index of the 16 biggest homebuilders has lost half its value in 2007, led by Beazer Homes and Hovnanian.

Sources: NAR press release, Bloomberg, MarketWatch, Wall Street Journal, CNNMoney.com, Houston Chronicle
Commentary: 'Near Perfect Storm' Brewing in Housing -- WaMu • What's in Store For the Housing Market? • Home Foreclosures Hit Yet Another Record
Stocks/ETFs to watch: LEN, PHM, CTX, DHI, BZH, HOV. ETFs: ITB, KBW, XHB, REZ

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.