In 2005 7.07 million home transactions set a real estate record for fifth straight year.

After five consecutive record years of existing nationwide homes for sale, key real estate industry observers are optimistic that 2006 will be the second best year in history and that the national median home price will continue to increase, although at a slower pace that last years 10.5%. Additionally, the inventory of unsold homes for sale is currently at a five-month level. A six-month supply is generally indicative of a more balanced real estate market between buyers and sellers demand.

Consumer sentiment has also rebounded since last fall despite continued Middle East, energy home prices and mortgage rates concerns. Januarys 106.3 index rating by the Consumer Board was the highest in three years. Historically, home buyer activity increases as consumer confidence improves. Actual home sales usually close 30 to 90 days later.

David Lereah, chief economist for the National Association of Realtors, predicts a slight falloff in existing home values in sales in 2006: This is part of the real estate market adjustment were anticipating, with a soft landing in sight for the housing sector. The level of homes for sale activity is now at a sustainable level and is likely to pick up in the months ahead. He said that overall fundamentals remain solid, driven by population and job growth. Home transactions totaled 7.07 million in 2005, up 4.2% over 2004. (See charts.)

David Liniger, chairman of RE/MAX, said that 2005 was the best year he has ever seen and anticipates that this year will see a mild correction in both home prices and sales. He still predicts that 2006 will be second-best to 2005 for sales.