Low interest rates expected to keep housing market healthy

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Lower-than-projected mortgage interest rates are expected to sustain housing at healthy levels, according to the National Association of Realtors. |ret||ret||tab|

NAR chief economist David Lereah said mortgage interest rates have moved lower than most forecasters expected. |ret||ret||tab|

"The silver lining in the cloud of economic uncertainty is historically low mortgage interest rates," he said. "The 30-year fixed mortgage interest rate dipped under 6 percent at the end of September to a 40-year low. |ret||ret||tab|

"To a great extent, lower interest rates are offsetting the effects of uncertainty over the economy and international events," Lereah said.|ret||ret||tab|

NAR forecasts existing-home sales to rise 3.2 percent for all of 2002 to a record of 5.47 million units, followed by a historically strong 5.28 million sales in 2003. "Back in January, we were only expecting 5.25 million existing-home sales in 2002. Although there was a surge of sales activity during the first five months of this year, we've settled down to a very sustainable and historically strong pace for the foreseeable future."|ret||ret||tab|

New-home sales are projected to rise 2.2 percent to a record of 929,000 units in 2002, with 907,000 sales next year. Housing starts should rise 3.1 percent to a total of 1.65 million units this year, with the same level of activity expected in 2003.|ret||ret||tab|

Lereah said the national median existing-home price this year is pegged at $157,800, up 6.8 percent from 2001; it should rise 4.1 percent in 2003, which would mark a return to a normal appreciation pattern as the market comes into a better balance between buyers and sellers. The typical new-home price is projected to be $183,700 in 2002, an increase of 4.9 percent from last year. A similar rise is seen in 2003.|ret||ret||tab|

The association projects growth in the U.S. gross domestic product to average 2.4 percent for all of this year and 3.1 percent in 2003. Consumer price inflation should be a negligible 1.6 percent in 2002, with consumer price inflation expected at 2.3 percent in 2003.|ret||ret||tab|

NAR forecasts the unemployment rate to trend downward to 5.3 percent by the third quarter of 2003. Inflation-adjusted disposable personal income is forecast to grow 4.4 percent in 2002 and 3.5 percent next year.|ret||ret||tab|

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