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WASHINGTON (September 3, 2003) – 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.
More detailed information about the association's economic
outlook, as well as other analysis of real estate industry
statistics, can be found in the September issue of NAR's Real
Estate Outlook: Market Trends and Insights. The publication
may be purchased by calling 800/874-6500.
The National Association of Realtors®, "The Voice
for Real Estate," is America's largest trade association,
representing more than 900,000 members involved in all aspects
of the residential and commercial real estate industries.
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