Realtors predict steady price climb

The National Association of Realtors, the industry's largest U.S. trade group, says nationwide home prices probably will gain 3.4 percent next year, double 2007's pace, as the economy improves.

The median price for a previously owned home will increase 3.4 percent to $233,000 in 2008, accelerating from a 1.5 percent pace this year, the Chicago-based trade group said last week in a forecast. The pace was 1.1 percent in 2006, falling from 12 percent in 2005, at the end of the five-year housing boom nationally.

The growth shows that the U.S. housing market avoided a crash, NAR's chief economist, David Lereah, said in the report.

While lower than the historical average, home sales show a "soft landing," Lereah said. He expects resales to grow to 6.58 million next year from 6.42 million in 2007.

"Despite the doomsayers, household wealth will not evaporate, and the economy will not go into recession," said Lereah, author of a 2006 book, "Why the Real Estate Boom Will Not Bust — And How You Can Profit From It," published by Doubleday. "Steady improvement in sales will support price appreciation moving forward."

The turnaround will come when buyers have fewer choices of homes on the market, said Ron Peltier, chief executive of HomeServices of America, the second-largest U.S. owner of residential real-estate brokerages.

"Inventory needs to be absorbed," Peltier said.

Measured in terms of how long it would take to sell off the existing stock, inventory stood at 6.3 months in November, higher than the 4.9 months a year ago but down from a high of 7.2 months in July, the Commerce Department reported.

Lereah expects the U.S. economy to expand at a 3.2 percent pace in 2008, up from 2.5 percent in 2007, he said in the NAR forecast. The average U.S. rate for a 30-year fixed mortgage is expected to be 6.6 percent next year, matching the expected 2007 rate. Last year, it was 6.4 percent, Lereah said.

U.S. home prices have risen an average of about 5 percent a year over the past 50 years, according to Freddie Mac, the No. 2 buyer of U.S. mortgages.