Housing Activity

*Housing activity dropped sharply in December in the aftermath of the expiration of the original first-time homebuyer’s tax credit. New home sales dropped by 7.6 percent to 342,000 units (seasonally adjusted annual rate, or SAAR) – the lowest level since March. Total existing home sales (single-family plus condominiums) plummeted by a record 16.7 percent to 5.45 million units (SAAR) – the lowest level in four months.

*For 2010, we forecast existing home sales to climb by 7.9 percent to 5.56 million units and new sales by 29.0 percent to 480 thousand units (reflecting their more depressed levels in 2009).

*There are likely to be some seasonal price declines in the winter months, some of which have been reflected in the recent data, with prices falling by 3-5 percent by the spring. Stronger sales and reduced inventory over the second half of the year should allow prices to be approximately unchanged over the course of 2010.

Source: PMI Mortgage Insurance