Freddie Mac raises estimate of sales, price gains for 2004


September 12, 2004

Freddie Mac, the second-largest mortgage financier, raised its estimate for 2004 home sales and price gains, saying the second-lowest mortgage rates in almost four decades will boost the U.S. housing market.

Sales of new and previously owned homes will reach a record 7.65 million this year, and prices probably will increase 8.6 percent, matching last year's gain, as the 30-year fixed mortgage rate averages 5.9 percent, Freddie Mac Chief Economist Frank Nothaft said last week. A month ago, he estimated 7.54 million sales, a 7.1 percent price rise, and an average fixed rate of 6 percent.

Consumer spending slowed from April to June, pushing mortgage rates below 6 percent after reaching a high this year of 6.3 percent in May, Nothaft said. The housing market probably won't be affected if Federal Reserve policy-makers raise the overnight lending rate when they meet in two weeks, he said.

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