Saturday, January 28, 2006

More indicators point to slowing real estate market

Last year, it seemed like all news was good news for the housing market. All indicators, surveys, indexes and news reports had a favorable "spin" on them ... at least through the summer.

Then came the beginning of the "questioning" of the staying power of the current double-digit upswing in home prices. Was it going to last? Was the housing bubble going to burst? Serious consideration was being given to a possible housing bust.

Well, it doesn't appear to be so gloomy, but it does seem to this author that the trend is towards a slowing market. Now, this doesn't mean that prices will go down fifty cents on the dollar. (We know that's what the buyers would like to hear.) It may just mean that prices may soften a little, and the double-digit annual appreciation may give way to single-digit price rises this year.

As such, another leading indicator, the Pending Home Sales Index, has slowed down for the third consecutive month according to the National Association of Realtors® (NAR). The chief economist for the NAR says that "We are clearly experiencing a market transition, moving from a prolonged boom to a more balanced period of sustainable sales."

If you would like to read more: pending home sales

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