PMI Expects '09 Sales to Break Even with '08
While national homes sales are expected to rise 10% year-over-year basis during the Q409, the sharp drop in sales experienced earlier in 2009 will keep yearly sales on par with '08 levels, according to projections from residential mortgage insurance and credit enhancement product provider The PMI Group (PMI). The report projects the continued oversupply of housing inventory will drop median housing prices 12.5% by the end of 2009. But a boost in the second half of 2010 will stabilize prices and sales of existing homes will rise 9.4% and new home sales will increase 21.6% next year. PMI anticipates Federal Reserve policies will remain constant and short-term interest rates should remain close to current levels, although long-term rates will “edge upward” next year. “Ultimately, both long- and short-term rates will rise substantially once the Fed begins to tighten in earnest – with the yield curve beginning to flatten at that time,” the report said. "Yields on riskier assets should continue to slip over the coming year as investors reduce their default expectations in a growing economy." The report also projects a 33% increase over last year in mortgage originations by the end of 2009. As purchase mortgages decrease 6.1%, there will be a projected increase in the share refinance mortgages to 66% of all mortgages originated in the year. But that will shift in 2010. PMI projects origination will decline 22%, but purchase activity will take a 15% greater share of the market, and the refinance share will drop to 50%. Write to Austin Kilgore.