Washington, DC, August 9--Home sales are expected to trend down from record levels during the second half of this year, but easily set annual records for both new- and existing-home sales, according to the National Association of Realtors.
Existing-home sales are forecast to increase 2.9 percent to 6.98 million for 2005, while new-home sales are seen to rise 4.8 percent to 1.26 million this year. Total housing starts – single-family and multifamily – should grow by 3.2 percent to 2.02 million units in 2005, the highest since 1978; single-family starts are projected to set a record of 1.67 million.
David Lereah, NAR’s chief economist, said home sales should be fairly stable in the near term. "The housing market is probably close to a peak right now in terms of sales activity, but there is tremendous momentum," he said. "Sales are expected to coast at historically high levels into next year, but they will trend slightly downward."
NAR president Al Mansell, of Salt Lake City, said housing shortages persist. "Because there is such a tight supply of homes available for sale, we’re now projecting the national median existing-home price this year to rise at a double-digit rate, which will be the strongest rate of price growth in 25 years," he said. "It’s a great time to sell, but it may be a better time to buy about a year from now when the market should come closer to balance. However, postponing a purchase for another year would mean higher borrowing costs, so there are advantages to getting in now – it all gets down to a buyer’s needs, resources and time horizons."
The national median existing-home price for all housing types is forecast to rise 10.5 percent in 2005 to $204,600, while the median new-home price should increase 5.2 percent to $232,400.
The 30-year fixed-rate mortgage is projected to rise slowly to 6.2 percent in the fourth quarter, and reach 6.6 percent by the end of 2006.
The U.S. gross domestic product is forecast to grow 3.6 percent this year, with the unemployment rate averaging 5.0 percent during the second half of 2005. The Consumer Price Index is expected to increase 3.0 percent this year, while inflation-adjusted disposable personal income is likely to rise 2.1 percent. The consumer confidence index should rise to 107 early next year.
