Do National Forecasts Mean Anything?

The National Association of Realtors (NAR) has just released their forecast and is a projecting the sale of existing homes will drop to 6.65 million sales this year. This is a 6 percent drop from the 2005 record year of 7.08 million sales. This is not a big surprise, although many of us might have predicted the drop to be bigger.

The NAR is also projecting new home sales to fall by a greater percentage from 1.28 million last year to 1.14 million this year, down 10.9 percent. Our local homebuilders would probably welcome that decline. The new home sales reports in Sacramento are far gloomier. According to the Gregory Group, a local company that follows the market, homebuilders in Sacramento, Yolo, Placer, El Dorado, Sutter and Yuba counties sold 2,081 homes from January through March 2006, compared to 4,812 in the same three months last year, a 57% drop.

There is no doubt that some of the slowdown is a result of rising home prices and higher interest rates but I firmly believe the bad weather has had significant roll in market performance and until we get a long stretch of warm sunny days it is going to be difficult to compare or predict how our local market will do in 2006.

By the way, what is going on in Elk Grove? I was working with a strong buyer over the weekend and we lost out on two homes, both multiple offer situations? Is it sunny and warm in Elk Grove?