Existing-Home Sales Headed for Yet Another Record, Economist Predicts - 6/14/2004 - Mortgage Loan Refinance Debt Equity

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

“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.

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.”