2004 home sales may top record set just last year

REAL ESTATE WATCH

February 15, 2004|By Bloomberg News

Freddie Mac said home sales this year may surpass the record set in 2003, boosted by rising employment and low interest rates.

Sales of single-family homes are expected to reach 7.28 million, up from the 7.19 million sold last year, Frank Nothaft, chief economist of the McLean, Va.-based company, said last week. He had forecast a 2.9 percent drop a month ago. Sales have reached records during each of the past three years.

Housing sales will benefit as slow inflation keeps the rate for a 30-year fixed mortgage at an average of 5.75 percent, below the 5.8 percent average of 2003, Nothaft said. Higher sales will bolster the housing sector's influence in the economy and prompt people to buy furnishings to outfit their homes, he said.

"With unemployment going down, with mortgage rates remaining at a low level, that should translate into a strong level of homes sales," Nothaft said.

Freddie Mac, the No. 2 buyer of U.S. mortgages, is the first of the major housing forecasters to say sales and mortgage rates may exceed last year's records.

Home prices probably will grow 6 percent on a year-over-year basis in 2004, Nothaft said, reiterating his month-ago forecast. In the past 20 years, price appreciation has averaged 4.5 percent, according to the National Association of Realtors in Washington.

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