Realtors: Slump to end in '07

The worst of the US housing slump is over, according to the National Association of Realtors.

Sales of previously owned US homes will grow at an annual rate of 6.29 million in the first quarter, snapping five consecutive quarterly declines, the industry's largest trade group said yesterday. New-home sales, about 15 percent of the market, won't recover until 2007's fourth quarter when transactions will grow to an annualized rate of 967,000 after bottoming at 944,000 in the third quarter, Chicago-based NAR said.

Falling mortgage rates have fueled hopes the housing market would rebound and bolster US economic growth after demand slumped for most of 2006. Home sales and ancillary purchases such as furniture account for 23 percent of gross domestic product, according to the Joint Center for Housing Studies at Harvard University.

"There's a consensus emerging that the beginning of the recovery is probably going to be 2007," Todd Vencil, an analyst at BB&T Capital Markets in Richmond, Va., said. "The spring selling season is going to be crucial in determining exactly when it begins."

The so-called spring selling season ranges from March to June and is the time when more than half of all US home resales occur. The busiest time for the new-home market starts in February, as it takes about six months to build a typical house and most families want to move before the school year starts in September.

The median price for a previously owned home probably will be $222,600 this year, up 1.4 percent from 2005, and increase to $224,700 in 2007, a gain of 1 percent. The median price for a new house probably will fall 0.5 percent to $239,700 this year and gain 0.8 percent to $241,700 in 2007, said David Lereah, NAR's chief economist.

Rates for a 30-year fixed mortgage likely will average 6.6 percent next year NAR said.