Strong housing market to be extended through end of year

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The housing market has made a very good comeback following some weaknesses earlier this year, and is expected to remain strong, according to the National Association of Realtors.|ret||ret||tab|

NAR chief economist David Lereah said home sales and construction have recovered from higher interest rates in the spring, the result of tightening moves by the Federal Reserve Board. |ret||ret||tab|

"In particular, existing-home sales rebounded from a sharp decline in July and appear to be stabilizing. However, the market is still dependent on the future direction of interest rates and consumer confidence," Lereah said in an NAR release.|ret||ret||tab|

Looking ahead, he said that housing is vulnerable to the impact of higher energy prices and a more volatile stock market. |ret||ret||tab|

"Higher fuel prices could result in inflationary pressure and higher interest rates, and continued volatility in the stock market can readily affect consumer confidence," he said. "The good news right now is that the fundamentals of the U.S. economy are healthy, and the housing market can be expected to remain strong for the balance of the year."|ret||ret||tab|

"Housing activity remains strong, but the current rebound is still off from the 1999 high, due to a softer economy and a more modest demand for housing," Lereah added.|ret||ret||tab|

NAR expects existing-home sales to drop 4.2 percent from the unprecedented volume of 5.2 million sales in 1999 to about 4.98 million sales this year. |ret||ret||tab|

New-home sales are expected to slip 3.1 percent in 2000 to 879,000 units, while housing starts are forecast to decline 5 percent to a total of 1.59 million units.|ret||ret||tab|

With 30-year fixed mortgage interest rates hovering under 8 percent, Lereah said he thinks they could decline to 7.75 percent by the end of the year. "Certainly, we don't expect the Fed to move on interest rates any time in the foreseeable future," he said.|ret||ret||tab|

The association expects the national median existing-home price for 2000 as a whole to be $137,400, an increase of 3.3 percent over last year; the typical new home price is expected to be $165,500, up 3.8 percent from 1999.|ret||ret||tab|

NAR expects U.S. economic growth, as measured by the Gross Domestic Product to be 5.2 percent for 2000; expectations have been revised downward for the third and fourth quarters, with GDP projected at 3.6 percent by the end of the year. Consumer price inflation for the year should be 3.3 percent.|ret||ret||tab|

The NAR also forecasts that the unemployment rate will stay around 4.1 percent for the remainder of year, while disposable personal income will grow about 3 percent for the year.|ret||ret||tab|

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