The Mortgage Bankers Association (MBA) released its long-term economic forecast for 2005, 2006 and 2007 during its annual State of the Real Estate Finance Industry press briefing. MBA is projecting strong economic growth through 2007, with gross domestic product (GDP) growing at a trend rate of about 3.5 percent in real terms annually.
Existing-home sales will come off record levels and fall by 7.2 percent in 2005, another 7 percent in 2006 and a bit more than 1 percent in 2007. At that pace, sales in 2007 will be at the then record level of 2002.
New-home sales will fall by 6.1 percent in 2005, by 10 percent in 2006 and another 3 percent in 2007, again at the record level of 2002.
In addition, home-price growth is expected to be less rapid, with existing-home prices increasing 4.7 percent during 2005 and new-home prices increasing 3.7 percent. Price increases in 2006 and 2007 are expected to be in the 3 percent to 4 percent range.