WASHINGTON – The National Association of Realtors on Tuesday lowered its forecast for U.S. home sales in 2006 and called on the Federal Reserve to stop raising interest rates because parts of the housing market are "vulnerable."
"Experiencing a slowing from a hot market is a good thing because we need a solid housing sector to provide an underlying base to the economy, and slower appreciation will help to preserve long-term affordability," said David Lereah, the group's chief economist.
"But this is a time for the Fed to pause on rate hikes because we have some interest-sensitive housing markets that have become vulnerable," he said.
The trade group, in its monthly forecast, said sales of existing homes should fall 6.8 percent to 6.60 million this year from the 2005 record of 7.08 million. Sales of new homes should decline 13.4 percent to 1.11 million from a record 1.28 million in 2005.
That is below the group's earlier forecast of 6.62 million existing home sales and 1.13 million new homes sales in 2006.
The Realtors said housing starts should fall 6.2 percent to 1.94 million in 2006 from 2.07 million last year.
The U.S. housing market has been steadily cooling down after a five-year run that shattered sales and construction records. The market began to slow last year as mortgage rates started to climb.
While the market is expected to keep easing off its record levels throughout the year, 2006 is still expected by many economists to be the third best year for housing ever.
The Realtors said the 30-year fixed-rate mortgage should average 6.9 percent during the second half of the year. The national median existing-home price for all housing types is forecast to rise 5.3 percent to $231,300.