Housing to Maintain Strength Despite Higher Interest Rates, Says NAR.

Business Editors/Real Estate Writers

WASHINGTON--(BUSINESS WIRE)--Aug. 7, 2003

Even with a sharp rise in mortgage interest rates in recent weeks, housing markets are expected to maintain strong levels of activity for the balance of the year, according to the National Association

David Lereah, NAR's chief economist, said mortgage interest rates are still fairly low. "Fixed mortgage interest rates recently were below 6 percent -- that is very much the exception to the norm and led to better than expected home sales during the first half of the year," he said. "We now think the 30-year fixed should stay below 6.5 percent for the balance of 2003, and that's still very favorable when you look at where rates have been over the last four decades. Home sales in the second half of the year won't be as robust, but we'll still see an annual record."

Lereah projects a record 5.65 million existing-home sales in 2003, up 1.5 percent from 5.57 million sales last year. New-home sales should rise 1.9 percent to 992,000 units, also a record. Housing starts are forecast to rise 0.4 percent to a total of 1.71 million units.

The national median existing-home price should continue to rise above historic norms, increasing 5.9 percent in 2003 to $167,600, while the median new-home price should rise 3.2 percent to $193,600.

Growth in the U.S. gross domestic product is projected to rise to an annual growth rate of 4.0 percent in the second quarter, with GDP for all 2003 expected to be up 2.4 percent. Consumer price inflation is forecast to be 2.3 percent this year.

Lereah forecasts that, as the economy improves during the second half of the year, the unemployment rate should decline to about 6.0 percent in the fourth quarter, and edge down to 5.8 percent for 2004. Inflation-adjusted disposable personal income should grow 2.9 percent in 2003, while the consumer confidence index should rise to 93 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 August 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(R), "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.

The next existing-home sales release is scheduled for August 25. The next economic and housing forecast will be released September 3.

Information about NAR is available at http://realtor.org. This and other news releases are posted in the Web site's "News Media" section under NAR News Releases. Statistical data and surveys may be found at http://realtor.org/research.

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