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Existing-Home Sales Headed for Yet Another Record, Economist Predicts

With the nation’s economy starting to reach full blossom and mortgage interest rates remaining historically low despite an upturn, David Lereah, chief economist for the National Association of Realtors® (NAR), is betting that existing-home sales will set a new record this year.

“NAR projects existing-home sales to hit a record 6.17 million in 2004,” Lereah said, “which would be 1.2% higher than last year’s 6.10 million record."

He also offered a prediction for the new home market, which he expects to register 1.08 million sales, just shy of last year’s record 1.09 million. NAHB’s assessment is that this year’s new-home sales performance will be running neck and neck with last year’s.

Lereah said that this year’s vigorous job growth is likely to blunt the impact of climbing interest rates.

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The cost of financing with a 30-year, fixed-rate mortgage is expected to reach 6.9% by this year’s fourth quarter, Lereah said, but “at the same time, unemployment should drop to 5.3%, so we continue to have a very favorable backdrop for housing.”

Job growth could reach 3 million this year, Lereah said.

“The economy is moving quickly now and the Fed is likely to raise short-term interest rates on June 30,” he said. “The market appears to have anticipated the move and has priced it into 30-year mortgage rates, but the cost of financing remains historically low and strong demand will push home sales to a record this year.”

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Mark Your Calendar for NAHB's Fall Construction Forecast Conference

Get the latest forecasts on housing starts, project budgets and other economic bellwethers of the housing industry at NAHB's Fall Construction Forecast Conference at the National Housing Center in Washington, D.C. on Oct. 27. Click here for more information.
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