After setting records in 2001 and 2002, home sales are projected to slip but remain historically strong this year, according to the National Association of REALTORS®.
David Lereah, NAR’s chief economist, said that even with the bulk of home sales taking place during the first half of this year, the forecast for total annual housing activity has been trending upward.
“The market has continued to perform better than expected, largely in response to the low level of mortgage interest rates which have predominated this year,” he said.
“We now expect existing home sales to total 5.52 million units in 2002, up 4.2 percent from last year’s record of 5.30 million. In 2003, sales should ease off to 5.29 million, but that would be just shy of the 2001 record – and it’ll be the fifth year that existing-home sales exceed the 5-million benchmark.”
Lereah expects the 30-year fixed mortgage interest rate to rise gradually to 6.8 percent by this time next year.
“Even so, mortgage interest rates are currently hovering near historic lows and aren’t likely to rise above 6.5 percent until the second half of 2003 when the economy should be picking up some steam,” he said.
NAR forecasts growth in the U.S. gross domestic product to be 2.4 percent for all of this year, but rising to an annual growth rate of 3.6 percent in third quarter of 2003. Consumer price inflation will be a mild 1.5 percent for 2002, with CPI projected at 2.2 percent next year.