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Housing market to stay on high plateau
WASHINGTON --
April 12, 2006 --
According to the National Association of
Realtors'® (NAR) monthly housing market report, home
sales should generally level out and remain at historically high levels,
making 2006 the third-strongest year on record.
David Lereah, NAR’s chief economist,
says mortgage interest rates are trending up but will remain favorable.
“Economic growth and job creation are providing a favorable backdrop for
the housing market, but rising interest rates have an offsetting
effect,” Lereah said. “Home sales will move up and down somewhat over
the remainder of the year but stay at a high plateau, meaning this will
be the third strongest year on record.” He expects the 30-year
fixed-rate mortgage to rise to 6.9 percent by the end of the year.
Growth in the U.S. gross domestic
product is forecast at 3.7 percent in 2006, while the unemployment rate
should average 4.8 percent.
Existing-home sales are projected to
drop 6.0 percent to 6.65 million this year from a record 7.08 million in
2005. New-home sales are likely to fall 10.9 percent to 1.14 million
from the record 1.28 million last year -- both sectors would see the
third best year following 2005 and 2004. Housing starts are forecast at
2.00 million in 2006, which is 3.2 percent below the 2.07 million in
total starts last year.
NAR President Thomas M. Stevens
notes that home prices are expected to cool, but not as much as in
earlier projections. “Although housing inventories have been improving,
the balance is still a bit more favorable for sellers and annual
appreciation remains in double-digit territory,” says Stevens. “Even so,
the market is in a process of normalization -- appreciation will return
to normal single-digit patterns, providing solid investment returns into
the future.”
The national median existing-home
price for all housing types is likely to increase 6.4 percent this year
to $221,700, while the median new-home price is expected to rise 2.3
percent to $242,700.
Inflation as measured by the
Consumer Price Index is seen at 3.4 percent in 2006. Inflation-adjusted
disposable personal income should grow 3.8 percent this year.
© 2006 FLORIDA ASSOCIATION OF
REALTORS®
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