Realtors group raises slightly its forecast for 2004 home sales

March 14, 2004|By BLOOMBERG NEWS

The National Association of Realtors, the U.S. real estate industry's largest trade group, has raised its estimate for home sales this year, saying sluggish job growth probably will keep mortgage rates close to historic lows.

A total of 6.96 million new and previously owned single-family homes are likely to be sold, slightly more than 0.06 of a percentage point more than the month-ago forecast of 6.92 million, the Washington-based group said in a statement last week. Last year's record of 7.19 million will stand, the group predicted.

Slow job growth is likely to help keep interest rates low, fueling demand for housing, said David Lereah, the group's chief economist.

A Labor Department report this month said companies created 21,000 jobs last month, far short of the median forecast of 130,000. As a result, the association said, the average rate for a 30-year fixed mortgage might rise to 6.3 percent by the fourth quarter, not the 6.5 percent it forecast a month ago.

"The silver lining now is that interest rates probably won't move much until late in the year, when the unemployment rate is expected to drop to 5.4 percent," Lereah said in a statement.

Unemployment reached a nine-year high of 6.1 percent in the second and third quarters of last year.

This year, 5.92 million previously owned and 1.04 million new homes are likely to sell, the group said. That would make this the second-best year on record, behind last year, when 6.1 million previously owned and 1.1 million new homes were sold.

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