Existing-home sales are expected to reach 5.96 million this year, which is 2.4 percent below the record of 6.1 million set last year, the National Association of Realtors reports in an economic outlook released today.
NAR expects new-home sales to reach 1.06 million, and median existing-home prices are projected to rise 4.4 percent this year to $177,400. Last year, the median existing-home price rose 7.5 percent. Also, median new-home prices are expected to increase 4.4 percent to $202,900.
NAR expects the unemployment rate to drop to 5.4 percent in the fourth quarter of the year, with job growth partially offsetting an expected rise in interest rates. David Lereah, chief economist for the association, said the 30-year fixed-rate mortgage is expected to reach 6.4 percent by the close of the year. “The fundamental demand for housing against a backdrop of an improving economy and mortgage interest rates that remain historically low mean home sales will remain near record levels.”
Lereah also said, “Recent reports on strong job gains reflect a pent-up demand in labor markets, which have been looking for signs that the economic recovery is on solid ground. The gross domestic product clearly is on a very positive track, which means we can expect a bit more pressure on interest rates as the year progresses.”
The consumer price index is projected to increase about 1.9 percent; inflation-adjusted disposable personal income should increase by about 3.5 percent; and the consumer confidence index is expect to reach 97 in the fourth quarter, NAR also reports. Also, NAR expects the U.S. gross domestic product to grow 4.7 percent this year, compared with 3.1 percent last year.
In the association’s previous economic forecast, released March 9, the 30-year fixed-rate mortgage was expected to reach 6.3 percent by year-end, and median existing- and new-home prices were expected to increase 4.6 percent and 4.5 percent, respectively.
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