The nation's housing market should continue to provide solid support to the U.S. economy throughout the remainder of 2003 and beyond, and will likely set a new record for sales of new single-family homes this year, the National Association of Home Builders (NAHB), Washington, D.C., reported today.
NAHB revised upward its forecast for 2003 sales of new single-family homes to 985,000 units -- about one percent above last year's record-breaking 973,000 units.
"For home builders, the early part of this year was complicated by unusually large swings in weather conditions and uncertainties related to the buildup to war with Iraq. Yet sales of new homes held near a million-unit annual pace and residential fixed investment accounted for about one-third of total GDP growth in the first quarter," said Kent Conine, NAHB president and a home and apartment builder from Dallas. "Home sales actually have strengthened in the wake of the war, and are now on track to beat our previous forecasts and support the economy over the balance of the year."
"Two key factors for our upbeat outlook include the successful passage of President Bush's economic stimulus package, which will strengthen job and income growth in the second half of the year, and the recent cut in interest rates by the Federal Reserve, which will help maintain very favorable interest rates on home mortgages," he added. NAHB estimates that long-term mortgage rates will average 5.3 percent in the present quarter, then rise slowly to an average of 5.5 percent in 2003's final quarter.
"Healthy house-price performance, continuing low mortgage rates, the expected effects of the economic stimulus bill, and solid builder confidence readings taken from our latest Housing Market Index survey are all excellent indicators that the housing industry will remain a strong and stable sector of the economy throughout the second half of 2003 and heading into 2004," said NAHB Chief Economist David Seiders.
"We're holding to our previous forecast for a total of 1.7 million housing starts this year, on a par with last year and a very healthy number. That includes an upwardly revised 1.0 percent gain in single-family home production, to 1.38 million units, and a 6.6 percent decline in multifamily production, to 324,000 units," said Seiders. "This pattern undoubtedly will generate new records for the nation's homeownership rate in 2003 and beyond."
"Remodeling of the stock of owner-occupied housing also figures to be robust in 2003, fueled by strong gains in house values and heavy borrowing against home equity through cash-out refinancings and other means," Seiders added. "Furthermore, strong single-family housing activity is prompting expenditures on furniture and appliances, adding to the stimulative economic benefits of housing."