Maybe No Slowdown Until 2006

The Mortgage Bankers Association is predicting that the housing market stays hot through at least the end of the year. The market seems to have momentum all of its own and I would probably still shy away from aggressively betting against future, near term, real estate gains. Although there is little evidence of a house price correction, maybe the release of corporate earnings over the next few weeks will offer some insight as to what bank lending practices were like in the second quarter, or how homebuilders view the market.

“WASHINGTON, July 12 (Reuters) - The hot U.S. housing market will hit records in 2005 but begin to cool off in 2006, the Mortgage Bankers Association said on Tuesday in a forecast that changed earlier predictions of a slowdown this year.

The group said sales of both new and existing homes will hit new highs for the fifth consecutive year as long-term, fixed mortgage rates climb gradually through the end of 2005.

Existing home sales should increase 2 percent this year but decline by 3 percent in 2006 while new home sales rise 2 percent in 2005 and then drop 4 percent in 2006, Mortgage Bankers Association Chief Economist Doug Duncan said.”