NEW YORK (CNNfn) - Strong demand and consumer-friendly interest rates will push the existing-home sales market to near record levels, a real estate industry economist said Monday.|
David Lereah, chief economist for the National Association of Realtors, said he now expects existing-home sales to slip only 3.5 percent from last year's record total of 5.02 million units in 2000.
"We now think this will be the second-best year ever for existing-home sales," Lereah said in a statement, "given the more favorable interest rate climate and continued strong demand."
New-home sales are forecast to drop 6.9 percent this year to 844,000 units, while housing starts should decline 5 percent this year to a total of 1.59 million units.
Lereah said 30-year fixed mortgage interest rates could decline to 7.75 percent by the end of the year.
"With the Fed holding steady on short-term rates, tame inflation numbers and strong productivity, mortgage interest rates may gradually decline over the next few months," he said.
Last month, the association reported existing home sales hit an annual rate of 4.79 million in the month, down 9.8 percent from both the June figure and the July 1999 level. It attributed the decline to higher mortgage rates.
NAR forecasts the national median existing-home price to be $137,200 for this year as a whole, an increase of 3.2 percent over 1999, while the typical new home price is projected to be $163,100 in 2000, up 2.3 percent from last year.
The association projects U.S. economic growth, as measured by the Gross Domestic Product, to be 5.2 percent for 2000, while consumer price inflation for the year should be 2.8 percent.
The group forecasts the unemployment rate to stay around 4.0 percent for the remainder of year, while disposable personal income will grow about 3.2 percent in 2000.