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[Gene GeRue <genegerue AT ruralize.com>]

Home Sales to Benefit from Slower Mortgage-Interest Rate Rise, NAR Says
                
RISMEDIA, May 10 – Mortgage interest rates have been trending-up less than 
expected, a pattern that should continue through next year and support 
strong levels of home sales. The forecast was released at the start of the 
National Association of Realtors® Midyear Legislative Meetings & Trade 
Expo; a record of more than 8,500 Realtors® and guests are expected to 
attend the May 9-14 meetings here.

David Lereah, NAR’s chief economist, said higher oil prices are having a 
dampening effect on economic growth. “A side benefit is that mortgage 
interest rates will be rising less than expected,” he said. “The 
essentially sideways movement in mortgage interest rates recently has 
defied the consensus of earlier forecasts, with only a modest uptrend 
detectable over time. The simple effect, in an economy with an improved 
labor market, is a higher demand for homes.”

Lereah projects the 30-year fixed-rate mortgage to rise gradually to 6.4 
percent in the fourth quarter, then average about 6.8 percent in 2006. “In 
other words, mortgage costs should remain historically low for the 
foreseeable future,” he said.

Sales of existing-homes, including single-family and condo, will be close 
to last year’s record, slipping only 1.2 percent to a total of 6.70 million 
in 2005. A similar pattern is expected for new-home sales – a decline of 
2.5 percent to 1.17 million this year, which also would be the second 
highest on record. Housing starts are seen to increase 0.7 percent to 1.97 
million units in 2005, the best performance since 1978.

The national median existing-home price for all housing types is forecast 
to rise 7.1 percent this year to $198,400. The median new-home price is 
expected to increase 5.1 percent in 2005 to $232,300.

The U.S. gross domestic product is projected to grow 3.3 percent in 2005, 
while the unemployment rate is expected to average 5.3 percent. Inflation 
should be tame with the Consumer Price Index rising 2.9 percent in 2005.

Inflation-adjusted disposable personal income is forecast to rise 3.5 
percent this year, while the consumer confidence index is expected to rise 
to 101 in the fourth quarter.

More detailed information about NAR’s economic outlook, as well as other 
analysis of real estate industry statistics, can be found in the May issue 
of NAR’s Real Estate Outlook: Market Trends and Insights. The publication 
may be purchased by calling 800/874-6500

http://www.rismedia.com/index.php/article/articleview/10295/1/1/