Dr. David Lereah, NAR's chief economist, said lower interest rates are keeping the housing sector strong. “With 30-year fixed mortgage interest rates a little under 7%, and expected to stay near this level for the balance of the year, we project existing-home sales to nearly match last year's performance,'' he said. “We now expect 5.07 million existing-home sales this year, off only 0.9% from 2000.
“That would make this the third highest year on record,'' Lereah added.
NAR forecasts new-home sales to rise 1.1% to a total of 920,000 units this year, while housing starts are forecast to slip 1.1% to 1.59 million units in 2001.
Lereah projects the 30-year fixed mortgage interest rate to average 6.9% throughout the year, down from 8.1% in 2000. We anticipate further cuts by the Federal Reserve -- in fact, the recent decline in mortgage interest rates results in part from lenders' anticipation of future reductions by the Fed,'' he said.
The association expects the national median existing-home price this year to be $144,800, an increase of 4.2% over 2000, while the typical new home price is expected to be $173,600 this year, up 4.5% from 2000.NAR projects U.S. economic growth, as measured by the Gross Domestic Product (GDP), to be 2.1% for 2001, rising from an annualized rate of 0.7% in the first quarter to 4.1% by the end of the year.