David Lereah, the association's chief economist, said job gains have been modest over time, but the rate of growth is relatively weak. He also noted that the Bureau of Labor Statistics Household Survey showed there were 1.3 million jobs produced last year.

"That's a wider measure of jobs than a separate survey of companies because it includes the self-employed, but we still have a way to go to recover all the jobs lost early in the decade," he said. "The silver lining now is that interest rates probably won't move much until late in the year, when the unemployment rate is expected to drop to 5.4 percent."

Lereah said the 30-year fixed-rate mortgage should trend up very slowly, reaching 6.3 percent in the fourth quarter. "Keeping interest rates close to historic lows will sustain very strong home sales, which should be only a few percentage points below last year's record," he said.

Existing-home sales nationwide are projected at 5.92 million this year, second only to 6.10 million in 2003. New homes are seen at 1.04 million sales, while housing starts should total 1.78 million in 2004.

"These are very respectable levels of home sales and construction, which will provide a solid foundation for economic growth," Lereah said. The U.S. gross domestic product is expected to grow 4.6 percent this year.

Inflation will remain tame, with the consumer price index increasing only 1.7 percent in 2004, while inflation-adjusted disposable personal income is expected to rise 3.1 percent. The consumer confidence index should improve slowly to 96 in the fourth quarter.

Home-price appreciation should be moderate in 2004, with the national median existing-home price projected to rise 4.6 percent to $177,700. The median new-home price should grow by 4.5 percent this year to $202,800. Locally, the median price of an existing, single-family detached home in California during January 2004 was $405,720, while Saratoga's median-priced home topped out at $866,250 for January and the Los Gatos median price was up to $942,500.

Slow job growth may also have an impact on those who can afford to buy a home, especially in California. The California Association of Realtors reported the percentage of households in California able to afford a median-priced home was down by 6 percent, with a housing affordability index of 23 compared to the same period a year ago when the index was at 29 percent.

The minimum household income needed to purchase a median-priced home at $405,720 in California in January was $94,020, based on a typical 30-year, fixed-rate mortgage at 5.70 percent and assuming a 20 percent down payment. The minimum household income needed to purchase a median-priced home was up from $79,690 in January 2003, when the median price of a home was $336,210 and the prevailing interest rate was 5.96 percent. The minimum household income needed to purchase a median-priced home at $168,700 in the U.S. in January 2004 was $39,090.

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.