To: "homestead AT lists.ibiblio.org" <homestead AT lists.ibiblio.org>
Subject: [Homestead] Real estate forecast by NAR
Date: Thu, 12 May 2005 07:58:56 -0700
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, NARs 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 years 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 NARs economic outlook, as well as other
analysis of real estate industry statistics, can be found in the May issue
of NARs Real Estate Outlook: Market Trends and Insights. The publication
may be purchased by calling 800/874-6500