Strong forecast for year’s home sales

The National Assn. of Realtors expects sustained strength in home sales this year as long as interest rates remain favorable.

The group’s chief economist David Lereah said the 30-year fixed rate will average 6.2% during the first half of 2003 before rising to 6.6% in the fourth quarter. The forecast of existing home sales of 5.4 million in 2003 is second only to 5.56 million sales in 2002. New home sales at 959,000 would be down from a record 976,000 sales last year. Housing starts are forecast at 1.69 million units this year, slightly below the 1.71 million units recorded in 2002.

The rise in the national median existing-home price is expected to slow. “We expect the median existing home price to increase 4.8% in 2003 to $165,800,” Lereah said. “At the same time, consumer price inflation should be only 2.5%, so home price appreciation will remain a little above the historic norm of 1 to 2 percentage points above inflation.”