WASHINGTON (October 5, 2004) – After setting unprecedented highs this year, home sales should ease but remain historically strong, according to the National Association of Realtors®.

Existing-home sales are projected to easily set a record of about 6.49 million* in 2004, well above the previous record of 6.10 million last year. New-home sales also will hit a record with 1.15 million, compared with 1.09 million in 2003.

David Lereah, NAR's chief economist, said month-to-month existing-home sales should not experience significant shifts. "In the first quarter of 2005, the trend will be a gradual ease in the sales pace with the housing market coasting at historically high levels as mortgage interest rates rise," he said. "At this point – with strong market fundamentals – we project next year will be the second-best overall year for the housing market."

Housing starts are forecast at 1.94 million in 2004, compared with 1.85 million last year. Similar to the sales market, housing construction is seen to ease in 2005.

Lereah expects the 30-year fixed-rate mortgage to rise to 6.3 percent in the first quarter of 2005, after averaging 5.9 percent this year. "Even with a modest rise in mortgage interest rates, we still have to go back to the mid 1960s to see comparable rates," he said.

The national median existing-home price is projected to grow by 7.0 percent this year to $181,800, while the median new-home price should increase 9.0 percent to $212,500. Price appreciation is expected to slow in 2005, but remain above historic norms with appreciation greater than 5 percent.

NAR forecasts the U.S. gross domestic product to grow 4.5 percent this year, and the Consumer Price Index should rise by 2.6 percent. The unemployment rate is expected to drop to 5.0 percent during the first quarter of 2005.

Inflation-adjusted disposable personal income is forecast to rise 3.0 percent in 2004, while the consumer confidence index should improve to 104 in the first quarter of next year.

More detailed information about NAR's economic outlook, as well as other analysis of real estate industry statistics, can be found in the October issue of NAR's Real Estate Outlook: Market Trends and Insights. The publication may be purchased by calling 800/874-6500.

The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

*Following availability of revisions by the U.S. Census Bureau to some statistical data, and feedback from the U.S. Federal Reserve Board, NAR will make benchmark revisions to both annual existing-home sales totals and monthly seasonally adjusted annual sales rates. Although the data will change, the overall characterization of the resale market in terms of historic comparisons and relative changes will be fairly consistent with previously reported data.

The changes will include addition of existing condominium and cooperative sales to the monthly series, with monthly revisions going back to 1999. Data prior to 1999 will not be directly comparable due to the benchmark break, but annual revisions will be made going back to 1981 when tracking of the condo market began. Monthly revisions for the single-family component will be made going back to 1989. The separate quarterly track of existing condo/co-op sales will be discontinued, although the new monthly data will show that segment's market share.

NAR's benchmark approach has been reviewed by the U.S. Federal Reserve Board and will be published in early 2005.