ResalesNear-record Home Sales Forecast This Year, Says NAR
David Lereah, NAR"s chief economist, said all the factors necessary for a strong housing market are in place again this year. "As the economy picks up steam in the second half of the year, a rise in jobs and consumer confidence will more than offset slightly higher interest rates. That will boost consumer confidence in purchasing high-ticket items such as homes and keep the housing market in record territory," he said.
NAR forecasts existing-home sales to slip only 0.5 percent in 2002 to a total of 5.27 million units, second only to last year"s record of 5.30 million sales. New-home sales are projected to drop 4.1 percent from a record 906,000 sales in 2001 to a total of 870,000 units this year. Housing starts are seen to decline 2.3 percent to a total of 1.57 million units in 2002.
Lereah expects U.S. economic growth, as measured by the Gross Domestic Product (GDP), to rise gradually to a 3.1 percent growth rate in the fourth quarter. Consumer price inflation for 2002 should be only 1.6 percent.
As the economy improves, the association projects the 30-year fixed mortgage interest rate to rise to 7.3 percent by the third quarter. "Despite an uptick in mortgage interest rates, affordability will remain favorable for most households in most areas," Lereah said.
NAR expects the national median existing-home price to rise 5.1 percent to $155,400 in 2002. The typical new home price is projected to be $184,700 this year, up 6.1 percent from 2001.
The association projects the unemployment rate to peak at 6.0 percent in the second quarter, then gradually decline. Inflation-adjusted disposable personal income is forecast to grow 2.3 percent this year.
More detailed information about the association"s economic outlook, as well as other analysis of real estate industry statistics, can be found in 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 about 800,000 members involved in all aspects of the residential and commercial real estate industries.
The next existing-home sales release is scheduled for March 25. The next economic and housing forecast will be released April 9.
Statistical data and surveys may be found at http://realtor.org/research.nsf.