Stronger job growth
WASHINGTON ” Stronger job growth is expected to be a positive factor in the housing market this year, partially offsetting the influence of rising interest rates, according to the National Association of Realtors®.
David Lereah, NAR’s chief economist, said healthy job gains should propel economic growth. “Recent reports on strong job gains reflect a pent-up demand in labor markets, which have been looking for signs that the economic recovery is on solid ground,” he said. “The gross domestic product clearly is on a very positive track, which means we can expect a bit more pressure on interest rates as the year progresses.” NAR projects the unemployment rate to drop to 5.4 percent in the fourth quarter.
Lereah said the 30-year fixed-rate mortgage is expected to rise slowly, reaching 6.4 percent by the end of the year. “The fundamental demand for housing against a backdrop of an improving economy and mortgage interest rates that remain historically low mean home sales will remain near record levels,” he said.
Existing-home sales are forecast at 5.96 million in 2004, only 2.4 percent below last year’s record of 6.10 million; new homes are projected at 1.06 million sales. Both markets would be the second-highest on record. Housing starts are seen at 1.80 million in 2004.
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The U.S. gross domestic product is expected to grow 4.7 percent this year, compared with 3.1 percent in 2003.
The rise in home prices is expected to moderate with the median existing-home price projected to increase 4.4 percent in 2004 to $177,400, compared to a 7.5 percent rise in 2003. The median new-home price also should increase 4.4 percent this year to $202,900.
Higher energy prices will modestly stimulate inflation, but it should stay fairly low with the consumer price index increasing only 1.9 percent this year. Inflation-adjusted disposable personal income should grow by 3.5 percent, while the consumer confidence index is expected to improve, reaching 97 in the fourth quarter.
More detailed information about the association’s economic outlook, as well as other analysis of real estate industry statistics, can be found in the April issue of NAR’s “Real Estate Outlook: Market Trends and Insights.” The publication may be purchased by calling (800) 874-6500
The National Association of Realtors, “The Voice for Real Estate,” is America’s largest trade association, representing
1 million members, including NAR’s institutes, societies and councils, involved in all aspects of the residential and commercial real estate industries.
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