Home Sales Projected to Settle But Set Record This Year
May 8, 2002
WASHINGTON? Existing-home sales are expected to slow following an unprecedented first quarter but are on track to set a new annual record in 2002, according to the National Association of Realtors®.
David Lereah, NAR's chief economist, said mortgage interest rates would be a little lower than projected earlier this year. "The consensus is that it will take a while for the economic recovery to stabilize, so the Federal Reserve is unlikely to raise interest rates before late summer," he said. "This means mortgage interest rates won't move very much this year, preserving favorable housing affordability conditions and contributing to record home sales."
The association projects the 30-year fixed mortgage interest rate to rise modestly to 7.2 percent during the second half of the year; in recent weeks it has remained below 6.9 percent.
NAR forecasts existing-home sales to slow from record sales activity in the first quarter to more sustainable levels going forward, with overall sales in 2002 rising 1.5 percent to a total of 5.38 million units, surpassing last year's record of 5.30 million sales.
New-home sales are projected to decline 2.7 percent from a record 909,000 sales in 2001 to a total of 885,000 units this year. Housing starts are seen to rise 1.1 percent to a total of 1.62 million units in 2002.
NAR forecasts the national median existing-home price to rise 5.0 percent to $155,100 in 2002. The typical new home price is projected to be $185,000 this year, up 5.6 percent from 2001.
Lereah expects U.S. economic growth, as measured by the Gross Domestic Product, to rise 2.7 percent this year. Consumer price inflation for 2002 should be only 1.9 percent.
The association projects the unemployment rate to decline to 5.7 percent in the second half of the year. Inflation-adjusted disposable personal income is forecast to grow 3.5 percent this year.
Source: National Association of Realtors®.