Sound Fundamentals Continuing in Strong Housing Market, NAR

WASHINGTON (July 5, 2001) With historically low mortgage interest rates, low unemployment and high consumer confidence, housing markets are expected to stay near historic highs, according to the National Association of Realtors^®.

Dr. David Lereah, NAR’s chief economist, said the favorable economic backdrop for housing activity would continue.  “We expect the economy to gradually pick up steam during the second half of the year, yet inflation will remain tame.  This should boost consumer confidence and keep the housing market rolling along at strong levels,” he said.  “Thirty-year fixed mortgage interest rates will rise and hover in the 7.3 range during the second half of the year, a little higher than we’ve seen but not enough to deter overall sales,” he added.

NAR forecasts existing-home sales to rise 0.7 percent in 2001 to a total of 5.15 million, still the second highest on record.  New-home sales will rise 4.6 percent to a total of 918,000 units this year, a new record, and housing starts are forecast to rise 2.7 percent to a total of 1.61 million units in 2001.

The association expects the national median existing-home price this year to be $145,300, an increase of 4.6 percent over 2000, while the typical new home price is expected to be $174,300 in 2001, up 3.1 percent from last year.

NAR projects U.S. economic growth, as measured by the Gross Domestic Product (GDP), to be 1.7 percent for 2001, rising from a projected rate of 0.7 percent in the second quarter to 3.2 percent by the end of the year.  Consumer price inflation for this year should be 3.3 percent.

The association projects the unemployment rate to rise to 4.8 percent by the end of 2001, still low in historic terms.  Inflation-adjusted disposable personal income is forecast to grow 2.4 percent this year.

Walter Molony 202.383.1177