Fort Hood Real Estate - Killeen homes, Copperas Cove homes, Fort Hood homes

Home sales and home price growth forecasts have been lowered measurably in the Ft. Hood area. The past couple of months of housing data have been much lower than anticipated. Take a look at some of the recent figures: July existing-home sales were down 11 percent from a year ago July pending home sales were 16 percent lower from a year ago July new home sales were down 22 percent from a year ago June and July single-family housing starts were down 14 percent and 17 percent, respectively June and July single-family permits were down 17 percent and 23 percent, respectively June and July mortgage purchase applications were down 19 percent and 24 percent, respectively Inventories for both new and existing homes were at an all-time high - 4.4 million homes on the market, which is equivalent of one listing for every 17 homes in the country.

 Home prices have been crawling with less than 1 percent appreciation from a year ago in the recent two months. That is not all. The economy has also been underperforming. The net payroll head count rose by an average of 142,000 per month in the past 12 months. In an expanding economy, the count should be above 200,000 per month. The forecast for GDP growth for the remainder of the year is also weak at only 2.5 percent. The weakening in the housing sector is the prime reason for the sub-par growth. The only positive news is the recent declines in mortgage rates. From a cyclical high of 6.8 percent at the end of June, 30-year fixed rates have trended lower since then with the latest weekly reading (as of October 27) coming in at 6.375 percent. Had rates continued their upward path and reached 7.5 percent, perhaps a third of the country's housing markets would be experiencing home price declines.

What's Ahead?

 Looking down the road, we see stabilizing mortgage rates and a modestly expanding economy through 2007. But housing will shift to the slower lane. The national forecast is for existing-home sales to fall 8 percent in 2006 followed by another 2 percent decline in 2007. The more cyclical new home sales will fall by an even greater amount -- 16 percent in 2006 and 7 percent in 2007. Correspondingly, the residential construction-spending portion of the economy will contract 3.4 percent in 2006 and 8.5 percent in 2007. In other words, $21 billion will be subtracted from GDP in 2006 and another $49 billion slashed in 2007.That would be a sharp contrast to near $50 billion additions during the housing market boom. (There is a caveat: any significant shifts in mortgage rates and the state of the economy will alter the outlook.)

And, Home Values?

 Home price growth will be minimal at less than 3 percent in both 2006 and 2007. But it is again worth emphasizing that all real estate is local. Some local markets will post much softer figures than that for the nation as a whole. Home price-to income ratio, home price-to-rent ratio, and more importantly, mortgage debt servicing cost-to-income ratio have greatly increased in some markets to worrisome levels. The ratio metrics in Florida, California, Arizona, Nevada, Virginia, and Maryland markets exhibit trends far above local historical norms. So it would not be surprising to see price declines in these states. These states do have solid job growth, however. Therefore, any price declines can be neutralized somewhat as new job holders provide demand support for the housing market. If, however, mortgage rates were to rise measurably -- to say 7.5 percent or 8 percent from the current 6.5 percent -- for whatever reasons (be it Chinese dumping dollars on the market, higher inflationary expectations, or more monetary tightening by the Federal Reserve), then these markets will undoubtedly come under intense pressure.