Housing economists discount likelihood of pricing bubble

REAL ESTATE WATCH

September 05, 2004|By Bloomberg News

U.S. home prices at record levels don't signal a national price "bubble" because low mortgage rates and prospects for improved job growth will help sustain demand, housing industry economists say.

The median price of an existing home in the United States rose 8.7 percent in July from the year-earlier month to a record $191,300, the National Association of Realtors reported.

The increases reflect surging demand and tight supplies as interest rates hold near last year's record low, economists said during a conference call Monday sponsored by the Homeownership Alliance, a coalition of housing industry organizations.

While there may be "yellow flags" in markets such as San Francisco where prices have outstripped income growth, the economists expect job growth and slow rises in borrowing costs to keep prices from plunging nationwide.

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