The national median existing-home price for all housing types is forecast to rise 10.5 percent in 2005 to $204,600 – the strongest rate of price growth in 25 years – while the median new-home price should increase 5.2 percent to $232,400, the National Association of Realtors reported today in its latest forecast for the year.
Existing-home sales are forecast to increase 2.9 percent to 6.98 million for 2005, while new-home sales are seen to rise 4.8 percent to 1.26 million this year, the association also announced today.
Total housing starts – single-family and multifamily – should grow by 3.2 percent to 2.02 million units in 2005, the highest since 1978; and single-family starts are projected to set a record of 1.67 million, the association announced.
David Lereah, NAR’s chief economist, said, “The housing market is probably close to a peak right now in terms of sales activity, but there is tremendous momentum. Sales are expected to coast at historically high levels into next year, but they will trend slightly downward.”
NAR President Al Mansell, of Salt Lake City, said, “Because there is such a tight supply of homes available for sale, we’re now projecting the national median existing-home price this year to rise at a double-digit rate. It’s a great time to sell, but it may be a better time to buy about a year from now when the market should come closer to balance. However, postponing a purchase for another year would mean higher borrowing costs, so there are advantages to getting in now – it all gets down to a buyer’s needs, resources and time horizons.”
The association expects the 30-year fixed-rate mortgage to rise slowly to 6.2 percent in the fourth quarter, reaching 6.6 percent by the end of 2006.
The U.S. gross domestic product is forecast to grow 3.6 percent this year, with the unemployment rate averaging 5 percent during the second half of 2005. The Consumer Price Index is expected to increase 3 percent this year, while inflation-adjusted disposable personal income is likely to rise 2.1 percent. The consumer confidence index should rise to 107 early next year, the association also said.
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