David Lereah, the association's chief economist, said the final numbers for 2002 are expected to shatter all-time records with 5.56 million existing-home sales and 979,000 new-home sales, up 5.0 and 7.7 percent respectively from the records set in 2001. "The momentum gained from low mortgage interest rates will carry strong home sales into 2003, with an improving economy offsetting modestly higher mortgage interest rates as the year progresses," he said.

Lereah said the economic stimulus package proposed by the Bush administration appears to be broad-based, benefiting both investors and consumers. "It would help housing by accelerating planned tax cuts, providing tax relief to equity investors and increasing the pace of economic activity," he said. "This means more jobs and a boost to consumer confidence, which will help to sustain strong home sales. It's our hope that whatever package is passed will achieve sufficient economic growth to avoid budget deficits and higher interest rates."

Lereah projects growth in the U.S. gross domestic product (GDP) to be 2.4 percent for 2002, rising to 3.1 percent this year. "Without the stimulus package, GDP would still rise but at a slower rate of about 2.7 percent in 2003," he said. "In fact, the economy should be growing at an annual rate of 3.8 percent by the end of the year."

"We project 5.34 million existing-home sales and 941,000 new-home sales in 2003, which would be the second-best year for each of the sale series," he said. Lereah expects the 30-year fixed mortgage interest rate to rise gradually from a current low of around 6.0 percent to 7.0 percent by the fourth quarter of 2003. He projects the unemployment rate to gradually decline to 5.3 percent by the end of this year from a current peak of 6.0 percent. The consumer confidence index is expected to rise from an estimated fourth-quarter 2002 reading of 83 to an index of 119 by the end of this year.

Housing starts are forecast to rise 5.6 percent to 1.69 million for 2002, then slip to 1.67 million units this year.

The National Association of Realtors estimates the national median existing-home price for all of 2002 to be $158,200, up 7.0 percent from 2001. The median price should rise 4.7 percent this year as the market comes into a better balance between home sellers and buyers, reaching $165,600.

The median new-home price is likely to be $182,000 for 2002, an increase of 3.9 percent from 2001. It's expected to rise 6.3 percent in 2003 to a median of $193,400.

Inflation-adjusted disposable personal income is forecast to grow 3.8 percent in 2003 following a 4.5 percent rise last year. Consumer price inflation is pegged at 1.6 percent for 2002, increasing to 2.5 percent this year.

Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to jnewton@jnpr.com.