| Spring Selling Season Declared a Bust |
| Written by Jonathan Smoke | |
| 05.09.2007 | |
Discuss this article on the forums. (0 posts)  “In a report issued yesterday, Ivy Zelman, a Cleveland-based housing analyst for Credit Suisse, said her building-industry contacts have been surprised by the weakness of sales recently, ‘given the typical seasonal bounce that occurs at this time of year.’ She added, ‘Our contacts have officially declared the spring selling season a bust.’ Many people who had expected a recovery by year end ‘now believe the market rebound will be pushed out until 2008 at the earliest,’ Ms. Zelman wrote.”
In line with these sentiments, the National Association of Realtors announced yesterday downward revisions to their prior forecasts for 2007 on prices, starts and sales. From the Inman news article on HousingIntelligence: “The National Association of Realtors has lowered its expectations for the housing market -- the group's latest 2007 forecast anticipates a 17.8 percent drop in new-home sales, a 19 percent drop in housing starts and a 2.9 percent drop in existing-home sales compared to 2006.
‘Housing activity this year will be somewhat lower than in earlier forecasts, with clearer analysis of the effects of stricter lending standards and a decline in subprime mortgage origination,’ the association reported. Also, the latest forecast calls for the median national existing-home price to fall about 1 percent and for the median new-home price to drop about 0.04 percent this year compared to last year.” We continue to see the theme of new home sales more significantly impacted than existing homes. The most likely cause for this is a build up in new home inventories in the markets that were most overheated and now suffering the most from a pullback in demand coupled with the glut in supply. As long as starts continue to decline more significantly than sales, eventually the supply new homes will fall, but as long as demand stays on the sidelines, the pace of inventory decline may be painful until the 2008 spring selling season. 
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