Nov. 29, 2005--The red-hot housing market has peaked and will start cooling off in the months ahead, the nation's largest real estate trade association said Monday.
Reporting sharp declines in existing home sales amid rising prices last month, the National Association of Realtors said the real estate market would soon strike a better balance of supply and demand that "places buyers on a more even footing."
"Buyers will have a wider choice available to them," NAR chief economist David Lereah said in a statement, noting that rising prices mean "demand is still there."
The association, which represents some 1.2 million members from small and large real estate firms nationwide, said October sales of single-family homes, townhouses, condos, and co-ops dropped to an annual rate of 7.09 million units -- down 2.7% from the previous month, though 3.7% above October 2004.
At the same time, home prices continued to rise, the association said. The national median price in October for existing homes of all types was $218,000, compared to $187,000 last year.
With fewer sales, inventories are also climbing. As October closed, there were 2.87 million lived-in homes on the market nationwide -- a 3.5% gain month over month, representing a 4.9-month supply at the current pace of sales.
Earlier this month, the Commerce Department also reported declines in construction permits for new homes last month.
By housing type, sales of existing single-family homes, selling at a median price of $229,800, dropped by 2.5% to 6.23 million, from 6.39 million in September. Condos and co-ops sales also fell by 4.4% to 862,00 units.
Regionally, prices in the West were higher than anywhere else in the country, up 16.2% from last year, to $316,000. The Midwest offered the lowest prices at $170,000.