Washington, DC, Dec. 6—Existing home sales will be close to a record this year, and with an economic upturn expected in the spring, sales in 2002 will nearly match this year, according to the National Association of Realtors.

Dr. David Lereah, NAR's chief economist, said home sales this year have defied projections. "The housing market is proving to be much more resilient than most analysts expected, and we will be just shy of the all time record for existing home sales, which was 5.21 million transactions in 1999," he said. "In addition, new home sales will set a new record this year, so it doesn't get much better than this."

Lereah said existing home sales will rise 1.6% this year to a total of 5.2 million units, the second highest on record, then slip 1% to 5.15 million in 2002, which would be the third best year. New home sales will increase 0.8% in 2001 to a total of 888,000 units, then ease by 0.4% next year to 885,000 units, which would tie the previous record in 1998. He forecasts housing starts to grow by 1.6% to a total of 1.6 million units this year, and then decline 3.5% in 2002 to 1.55 million units.

The association forecasts the national median existing home price for 2001 will be $146,600, an increase of 5.5% over last year, then rise another 3.5% in 2002 to $151,700. The typical new home price is expected to be $172,200 this year, up 1.9% from 2000, and then rise 3.6% next year to $178,400. "With a slowdown in the upper end of the market, the median new home price has been fairly low over the last few months, which accounts for the small annual increase in the new home price this year," Lereah said.

Lereah expects the 30 year fixed mortgage interest rate to rise gradually to 7.2% by the second half of 2002, after bottoming out at an average of 6.7% for the fourth quarter of this year. "Even with the uptick in mortgage interest rates, these are still relatively low rates and we expect favorable affordability conditions to prevail in the coming year," he said.

NAR expects the current recession to turn around by the spring of next year. U.S. economic growth, as measured by the Gross Domestic Product (GDP), will go from a 1.5% rate of contraction in the current quarter to a 1.9% positive growth rate in the second quarter of 2002. Consumer price inflation for this year will be 2.9%, then slip to a 1.8% inflation rate for 2002.

Lereah forecasts the unemployment rate to rise gradually to 6.1% by second quarter of next year before easing in the second half, while inflation adjusted disposable personal income should grow a healthy 3.9% in 2001 thanks to tax rebate checks, and another 2.2% next year.

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