Median home price expected to rise.
Wednesday August 8 2:00 PM ET
Home sales and housing starts have remained strong and are keeping the economy in positive territory, despite economic reports indicating economic deterioratation, according to the National Association of Realtors.
"The three major housing indicators--new and existing-home sales and housing starts--have stood tall and bright, keeping the overall economy afloat," said Dr. David Lereah, NAR’s chief economist. "The strong housing market this year may have bought enough time for the manufacturing sector to heal its wounds, and consumer spending is expected to pick up in the second half of the year due primarily to the tax rebates being mailed to taxpayers."
Lereah projects existing-home sales will rise 1.4 percent this year to a total of 5.18 million units, the second-highest on record, while new-home sales will rise 3.5 percent to a total of 908,000 units, a new annual record. He forecasts housing starts to rise 3.1 percent to a total of 1.62 million units this year.
The national median existing-home price for 2001 is expected to be $146,300, an increase of 5.3 percent over last year, while typical new home price is expected to be $175,400 this year, up 3.7 percent from 2000.
Lereah expects the 30-year fixed mortgage interest rate to average 7.2 percent for the balance of the year.
"If the manufacturing sector continues to display signs of life, the Fed’s accommodative posture in the financial markets may be coming to an end, but another quarter-point rate cut is possible," Lereah said.
NAR expects U.S. economic growth, as measured by the gross domestic product, to rise from a 0.7 percent growth rate in the second quarter to 2.8 percent by the end of the year.
Consumer price inflation for this year is forecast to be 3.2 percent.
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