Realtors expect 2005 record housing sales

Existing-home sales are expected to rise 2.8 percent to 6.97 million this year, according to a July 13 NAR news release. In June, the association was expecting 6.89 million sales, and the record was 6.78 million in 2004.

New-home sales should increase 3.2 percent to 1.24 million in 2005, also a record. Total housing starts – single-family and multifamily – are forecast to grow by 5 percent to 2.05 million units, the second highest number on record. The peak was 2.36 million in 1972, and 2005 is seen to be a record for single-family construction, with 1.68 million homes started.

David Lereah, NAR’s chief economist, said that in each month of 2005, the forecast has been looking stronger than in previous projections.

“Earlier this year, we expected 2005 home sales to be the second-highest on record, but monthly sales have been at or close to record levels. Although we should come off of sales peaks in the months ahead, mortgage interest rates have remained lower than expected, and job gains are providing additional stimulus, meaning unprecedented sales totals this year,” he said.

The most notable problems in the housing market, Lereah added, are the shortages of homes for sale and of some building materials.

“These shortages are proving to be a challenge for home buyers, builders and remodelers, and are continuing to put pressure on home prices,” he said.

Lereah expects the national median existing-home price for all housing types to rise 9.4 percent this year to $202,600, with the typical new-home price increasing 5.8 percent to $233,900.

NAR President Al Mansell, of Salt Lake City, said low interest rates are keeping housing affordable in most of the country.

“We have to go back to the mid-1960s to see a period of comparably low mortgage interest rates,” Mansell said. “A big difference now is a decline in mortgage origination costs, plus a mushrooming in the availability of low- and no-down payment loans.”

The 30-year fixed-rate mortgage should rise slowly to 6.1 percent in the fourth quarter and reach only 6.5 percent by the end of 2006. According to Freddie Mac, the current 30-year fixed rate is 5.62 percent.