Single-family house resales in 2005 could top 7 million

August 21, 2005|By Bloomberg News

Fannie Mae, the largest mortgage company, predicts U.S. sales of existing single-family houses will top 7 million this year for the first time while prices rise by the most in a quarter century as low interest rates fuel demand.

Sales will reach 7.03 million, up 3.6 percent from 2004's record 6.78 million transactions, David Berson, Fannie Mae's chief economist, said in a forecast in Washington last week. A month ago, he predicted 6.79 million sales. Home prices will rise 11 percent, Berson said, the biggest jump since a 12 percent gain in 1980.

Low mortgage rates have fueled demand for U.S. housing and boosted the number of homes being purchased for investment, Berson said in the report. Rising rates probably will cool the investor market as the year draws to a close, he said.

"There will be a small falloff in activity later this year, presumably as investor activity begins to cool and as mortgage rates continue to edge upward," Berson said in the statement.

The average U.S. rate for a 30 year fixed mortgage was 5.80 percent last week, Freddie Mac, the No. 2 mortgage company, reported Thursday. Measured annually, the rate probably will average 5.76 percent this year and 5.86 in 2006, Berson said.

- Bloomberg News

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