Economists are not ready to declare this year's housing boom over, but the latest data on home resales underscore a growing consensus that housing will slip next year.
The report, released Monday by the National Association of Realtors, show sales of existing homes slipped 1.1% in September to an annual rate of 4.68 million units, from 4.73 million in August.
"Typically ... April through August are the highest months in terms of homebuying," said Fred Flick, vice president of economic research at the National Association of Realtors. "It's also possible that the good houses went in the earlier part of the year."
The September rate topped the 4.3 million of a year earlier but was way down from July's all-time high of 4.91 million.
David A. Lereah, chief economist of the Mortgage Bankers Association of America, said mortgage applications were coming in at a record rate-three times that of the early 1990s.
"I don't think we're going to see a downward turn yet," said Mr. Lereah.
"But we predict an 8% contraction for 1999 because the economy is slowing because of world crises. The stock market is coming down, and that will dampen the appetite for home buying."
He added that the projected decline in home sales next year would mean a 17% drop in mortgage lending and origination.
However, with 80% of purchase mortgages slated for existing houses, the purchase index indicates that home sales will not go down in the next two months, Mr. Lereah said.
Mr. Flick said mortgage lenders will still have a good year in 1999, if not a great one.
"Prices of homes will be 5% more next year," he said. "There will be fewer homes sold, but they'll be more expensive and the dollar volumes for lenders will be similar."
Mr. Lereah said that projections are contingent on interest rates, which seem to be steadily declining with the economic slowdown.
"I think we'll see mortgage rates stay under 7%; inflation is low and people want to keep their money in dollars," said Robert Van Order, chief economist for Freddie Mac. "Low interest rates have kept the boom going longer than it would have otherwise, but the levels are too high to sustain."
Mr. Van Order predicted 1998 purchase and refinancing originations would set a record-$1.37 trillion. "Housing prices increased at an annual rate of about 4%, which is still above inflation at 2%," he noted.
"There will be a slowdown in 1999," Mr. Van Order said, "but we expect it to still be around $1.1 trillion."
This means people will have more incentive to buy homes as an investment, said Mr. Van Order.
"Housing prices are growing faster than inflation but this won't change loan accessibility because income in dollars is growing at a comparable rate as well," he said.
