U.S. home prices to rise at record pace, group predicts

REAL ESTATE WATCH

November 16, 2003|By Bloomberg News

The National Association of Realtors said mortgage rates that were less than 6 percent for most of the year will help propel U.S. home prices to a record increase.

The median price for an existing single-family home likely will jump 8.8 percent to $172,100 this year, surpassing the record 14.4 percent rise in 1979 when the median price was $55,700, the Washington-based trade group said. Prices rose 7 percent last year to $158,200.

The group said last week that the national median housing price during the third quarter jumped 10.1 percent to $177,000 compared with the corresponding three months of last year. In Baltimore, the median price was $220,200 during the quarter - a 17.8 percent increase, according to the Realtors' association.

Cheaper borrowing costs mean buyers can afford to pay more for homes. Sales will climb this year to 7.04 million units, higher than last year's record 6.54 million, the association said. Next year, higher interest rates will probably slow price appreciation, said David Lereah, the group's chief economist.

The average 30-year fixed-mortgage rate likely will average 5.9 percent this year and 6.5 percent next year, Lereah said.

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