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Bright Mid-Year Housing Outlook Good News for Nation’s Economy

If the new NAHB projections are on target, 985,000 new houses will be sold this year, surpassing last year’s short-lived record of 973,000 units by about 1%.

While rough weather conditions and the buildup to war in Iraq cast some doubts over housing’s performance earlier this year, sales of new homes held to an annual pace of nearly one million and residential fixed investment accounted for roughly one-third of the growth in the nation’s economy during the first quarter, noted NAHB President Kent Conine.

“Home sales actually have strengthened in the wake of the war, and are now on track to beat our previous forecasts and support the economy over the balance of the year,” he said.

Auguring well for this year’s second half, he said, are President Bush’s economic stimulus, which will create jobs and increase households’ disposable income, and the recent cut in interest rates by the Federal Reserve, which will help ensure that mortgage rates continue to linger in very favorable territory.

Healthy growth in home prices and solid confidence among builders polled for NAHB’s monthly Housing Market Index provide additional indications that housing will remain “strong and stable” for the balance of this year and into 2004, said NAHB Chief Economist David Seiders.

Housing starts this year will total 1.7 million, Seiders said. NAHB’s forecast for single-family construction has been revised upward by 1% to 1.38 million units, while multifamily production will decline by a moderate 6.6%, to 324,000 units.

With so much good housing news in the offing, Seiders predicted that the nation’s rate of homeownership is headed to a new record this year and remodeling activity will be robust.

“Furthermore, strong single-family housing activity is prompting expenditures on furniture and appliances, adding to the stimulative economic benefits of housing,” he said.

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