Stronger than expected home sales and higher median prices have caused the National Association of Realtors (NAR) to revise upward its year-end forecast. Existing-home sales are expected to jump 7.9 percent to 6.58 million in 2004, well above last year's record. For 2005, NAR projects 6.38 million sales, the second highest level on record.

The national median existing-home price is projected to rise 7.9 percent to $182,500 for the year. The median new-home price should increase 8.9 percent to $214,600. New-home sales will rise 8.9 percent to 1.18 million this year and 1.13 million are forecast for 2005, just shy of the record expected this year. Housing starts are seen at 1.95 million this year, the highest level since 1978; housing construction is projected at 1.87 million units in 2005.

NAR predicts that 30-year fixed-rate mortgages should rise slowly but average only 6.4 percent next year.

In 2005, the association expects the median existing-home price to rise 5 percent and the typical new home price to grow by 5.8 percent.

NAR forecasts tame inflation with the Consumer Price Index rising 2.7 percent this year and 2.1 percent in 2005. The U.S. gross domestic product should grow by 4.4 percent for all of 2004 and another 4 percent next year. The unemployment rate is projected to decline to 5.1 percent by the second half of next year.

Inflation-adjusted disposable personal income is forecast to increase 3.1 percent this year and 3.9 percent in 2005, while the consumer confidence index should rise to 105 in 2005.