The US property market ended the fourth quarter of 2006 at a low point. The sales downturn was deeper than expected and prices fell for the longest stretch in over a decade.

However, the New Year is expected to bring some positive changes. According to the National Association of Realtors (NAR), existing-home sales are forecast to gradually rise through 2007 and into 2008, with new-home sales witnessing a turnaround by summer 2007.

David Lereah, NAR’s chief economist, said that different parts of the U.S. will experience different adjustments to the conditions in the property market “Roughly three-quarters of the country will experience a sluggish expansion in 2007, while other areas should continue to contract for at least part of the year,” he said. “Most of the correction in home prices is behind us, but general gains in value next year will be modest by historical standards.”
Existing home sales for 2006 are expected to come to 6.50 million, with a total of 6.42 million seen in 2007. New-home sales in 2006 should reach 1.06 million, with 957,000 projected this year.

However, the housing market will continue to have an effect upon the wealth and equity of property owners and builders alike. Both will suffer the consequences of the slowdown in the market throughout 2007, as the stalling of home prices, sales and new construction will continue.

Away from the housing market, there are some more encouraging movements in the economy. The unemployment figure forecast for 2007 is currently at 4.8%. While this is a slight increase on the Q4 2006 figure, weekly figures for January 2007 have seen a decrease. Overall, jobless claims are still at a level that most economists see as consistent with the solid pace of employment growth. This is an important issue, as one of the determining factors affecting consumer spending and the economy is employment figures.

By the end of 2006, the US had witnessed high levels of export growth, which has largely been driven by the, driven by the weaker dollar and strong economic growth abroad. US exports in goods and services grew almost 1% to $124.8bn.

The growth in exports has had a large influence on the US trade gap, which has been falling since November. Lower oil prices also accounts for part of this drop; the international price of crude oil has dropped to a 19 month low. For February, the price is down a further 51 cents, to $53.51 a barrel.

Presently, the Federal Reserve has maintained interest rates at 5.25%, counting on slower economic growth to help contain inflation. Inflation, as measured by the Consumer Price Index, is expected to be 2.2 percent 2007, down from 3.2 percent in 2006.

The IMF has forecast US GDP growth at 3.3% for the first quarter of 2007