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Home Sales to Stay in Record Territory This Year
"WASHINGTON -- Both new- and existing-home sales will remain historically strong this year while the pace of price appreciation should ease, according to the National Association of Realtors. Sales of existing-homes, including single-family, condo and co-op, are expected to decline 3.2% to a total of 6.57 million in 2005 from a record 6.78 million last year.New-home sales are seen at 1.13 million this year, 5.9% below a record of 1.2 million in 2004; the projections for both new- and existing-home sales in 2005 would be the second best on record. Housing starts are forecast to slip 0.7% to 1.94 million units in 2005."After setting four consecutive record years, the housing market is due for a breather," said David Lereah, NAR chief economist. "As mortgage interest rates creep up and home sales slow a bit, we should see a better balance between home buyers and sellers -- that will take some of the pressure off of home prices." Lereah expects the 30-year fixed-rate mortgage to gradually increase to 6.7% by the end of the year; for all of 2005 the rate should average 6.2%.The national median existing-home price for all housing types should grow 5.6% this year to $195,500. The median new- home price is expected to rise 3.9% in 2005 to $228,300. Appreciation last year was 9.3% for all existing homes, and 12.6% for new homes."In January we set a record low for the supply of existing homes available for sale," said Al Mansell, NAR president and chief executive officer of Coldwell Banker Residential Brokerage in Salt Lake City. "Until the market gets closer to equilibrium between home buyers and sellers, prices will continue to rise faster than normal."Typically, home prices rise at the rate of inflation plus one to two percentage points, he said.Inflation should stay modest with the Consumer Price Index rising 2.6% in 2005. The U.S. gross domestic product is expected to grow 4% this year, while the unemployment rate should average 5.1%. Inflation-adjusted disposable personal income is forecast to grow 3.8% in 2005, while the consumer confidence index should rise to 107 during the second half the year.The National Association of Realtors is America's largest trade association, representing one million members involved in all aspects of the residential and commercial real estate industries."