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National Association Of Realtors Releases Forecast
As mortgage interest rates continue to rise at a less-than-expected pace, the National Association of Realtors released its forecast.
The forecast was released at the beginning of the National Association of Realtors Midyear Legislative Meetings & Trade Expo. The expo runs from today to May 14.
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 expects the 30-year fixed-rate mortgage to grow gradually to 6.4% in the fourth quarter, then average around 6.8% in 2006. "In other words, mortgage costs should remain historically low for the foreseeable future," he said.
According to a press release, sales of existing-homes, including single-family and condo, will be close to last year's record, slipping only 1.2% to a total of 6.70 million in 2005. A similar pattern is expected for new-home sales - a decline of 2.5% to 1.17 million this year, which also would be the second highest on record. Housing starts are seen to increase 0.7% 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% this year to $198,400. The median new-home price is expected to increase 5.1% in 2005 to $232,300.
The U.S. gross domestic product is projected to grow 3.3% in 2005, while the unemployment rate is expected to average 5.3%. Inflation should be tame with the Consumer Price Index rising 2.9% in 2005.
Inflation-adjusted disposable personal income is forecast to rise 3.5% this year, while the consumer confidence index is expected to rise to 101 in the fourth quarter.
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Chris Crum
