Real Estate Sales in 2010 Widely Expected to Increase

Home sales will increase 15 percent to about 5.7 million units and REALTOR® income will be up 20 percent in 2010, according to NAR Chief Economist Lawrence Yun.  He credited the home buyer tax credit with unleashing sales on the lower-end of the housing market this year, bringing up to 400,000 first-time buyers into the market who wouldn't have bought otherwise. That influx tightened inventories of starter homes, shored up prices, and helped reduce households' fear over continuing price drops.

The market will continue to improve now that the tax credit has been extended into 2010, and existing homeowners are included, with a smaller credit available to repeat buyers and to households with higher incomes.

Yun predicts the supply of homes to stabilize at the historic norm of six to seven months. Homes above $500,000 will remain elevated in the near-term, but that weakness will be offset by a hefty drop in starter-home inventories, which are running at about a five months supply.   As prices stabilize, and inventory reduces, appraisals will improve, and foreclosures will ease.  This will make it less likely that Fannie Mae, Freddie Mac, and even FHA will need help from the taxpayer.