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With consumer confidence on the rise and the stock market showing some signs of improvement, the end-of-the-year economy may be better than first predicted. The housing market has continued to be resilient and looks like it will also have a strong finish.
The volume of home sales this year will be stronger than earlier projected and should easily surpass last year's record, according to the National Association of Realtors.
David Lereah, the association's chief economist, said historically low mortgage interest rates are the primary factor. "Lower than expected mortgage interest rates have brought more buyers into the housing market, offsetting sluggish economic growth and weakness in the labor markets," he said.
Lereah expects 5.73 million existing-home sales this year, up 2.9 percent from a record 5.57 million sales in 2002. New-home sales should rise 3.1 percent from last year's record to 1 million units. At the same time, housing starts are projected to rise 0.5 percent to a total of 1.71 million units.
"Mortgage interest rates appear to have reached bottom and are likely to rise slowly to the range of 5.7 percent for a 30-year fixed rate by the end of the year," Lereah said.
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.
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