by Calculated Risk on 5/30/2006 09:44:00 AM

Fannie Mae Economist David Berson writes: Housing continues to weaken, although it's not collapsing.

Most of the latest data on housing activity show that this sector continues to weaken ... With mortgage rates edging upward, economic growth moderating, and home price appreciation slowing (and in some areas falling, thus reducing investor demand), the prospects of a bounce-back for the housing market this year appear to be dim.
...
Even with these declines in housing activity ... we continue to project the third strongest year ever for 2006 -- even with sales down by 7-10 percent. In fact, total home sales would have to decline by more than 20 percent in 2006 for sales this year to fall out of the top-three years -- highly unlikely in a non-recession year.

Here is a chart of New Home Sales through April:


Click on graph for larger image.

As Berson noted, 2006 is on track to be the third strongest year ever behind 2005 and 2004. New Home Sales are off 11.2% YTD compared to 2005.

Berson's numbers are slightly different because he includes Existing Home Sales.