Report from NAR economist David Lereah

 NAR chief economist David Lereah said today that existing home sales have likely hit bottom in the final quarter of last year. He projects a gradual rise in home re-sales in 2007 however sales tallies will likely remain below the 6.48 million unit pace set in 2006. Forecasts are for existing home sales to reach a level of 6.64 million in 2008. Weakness in new home sales is expected to persist this year and next. New home sales are expected to come in at 961k in 2007 and 971k in 2008, both below the 1.06 million units sold in 2006.

 Productivity grew at a 3.0% rate in the fourth quarter after declining 0.1% in the third. Unit labor costs rose just 1.7% in Q4 compared to a 3.2% gain in Q3. The rebound in Q4 is a result of much higher output and less hours worked. Growth in productivity without accompanying labor cost pressures should help to keep margins healthy and/or limit price increases.