After setting records in 2001 and 2002, home sales are projected to slip but remain historically strong next year, according to the National Association of Realtors (NAR), Washington, D.C.
David Lereah, NAR's chief economist, said even with the bulk of home sales taking place during the first half of 2002, 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 that have predominated in 2002,” 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,” Lereah said. “In 2003, sales should ease off to 5.29 million, but that would be just shy of the 2001 record. And it will be the fifth year that existing home sales exceed the 5 million benchmark.”
New home sales are forecast to rise 5.6 percent to a record of 960,000 units in 2002, then ease in 2003 to 924,000 sales, the second highest on record. Housing starts should increase 4.8 percent to a total of 1.68 million units in 2002, then slip to 1.66 million in 2003.
Lereah expects the 30-year fixed mortgage interest rate to rise gradually to 6.8 percent by early 2004. “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 pick up some steam,” he said.