Housing Market To Ease, Then Return To Strong Leve

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Housing Market To Ease, Then Return To Strong Leve
Washington, DC, Sept. 5--After surging to a record in July, home sales can be expected to dip slightly but hold at historically strong levels through next year, according to the National Association of Realtors. David Lereah, NAR's chief economist, said the recent rise in mortgage interest rates was one of the fastest on record. "But even with the increase, mortgage interest rates currently are below the average for all of 2002," he said. "Given that last year was a record for home sales, today's interest rates are still very attractive and will keep sales at relatively strong levels going forward. We expect only a modest rise in interest rates, with the 30-year fixed staying below 6.5 percent for the rest of the year." NAR forecasts a record of 5.76 million existing-home sales this year, up 3.5 percent from 5.57 million sales in 2002. New-home sales are seen to grow by 5.4 percent to a record of 1.03 million units. Housing starts should increase 1.7 percent to a total of 1.73 million units. "Home sales are likely to slow 6 to 7 percent in 2004. Even so, that would be the third-best year on record," Lereah said. "Housing will continue to provide a solid foundation for the economy for the foreseeable future." The national median existing-home price is expected to increase 6.6 percent in 2003 to $168,600, while the median new-home price should rise 3.2 percent to $193,700. "With a more balanced market between buyers and sellers expected in 2004, home prices should rise in the range of 4 to 4.5 percent," Lereah said. He projects growth in the U.S. gross domestic product (GDP) to rise to an annual growth rate of 4.9 percent in the current quarter, with GDP for all 2003 increasing 2.6 percent. Consumer price inflation should be 2.3 percent for the year. The unemployment rate should decline to 6.0 percent in the fourth quarter, then average 5.7 percent next year. Inflation-adjusted disposable personal income is forecast to grow 2.9 percent in 2003, while the consumer confidence index should rise to 95 by the fourth quarter.