Low rates expected to spur growth
November 4, 2002-- Home Textiles Today,
Still egged on by low mortgage rates, the housing market is expected to hold strong moving into next year, but the path could be bumpy due to uncertainty over a war with Iraq, stock market volatility and weak consumer and business confidence, said economists at the annual conference of the National Association of Home Builders (NAHB).
"The key shock absorber in the economy is excellent mortgage rates that have averaged around 6 percent. We look for rates to gradually edge up to 6.5 percent by the end of next year, which is not a big deal," said David Seiders, NAHB chief economist.
Seiders described the current market as "an incredible situation, with record new home sales, 953,000, and starts, 1.34 million, expected this year. And next year's forecast is also very positive."
The home builders are forecasting that overall housing starts will rise by 5.3 percent this year, to 1.69 million units, and then decline by 3.4 percent next year, to 1.63 million units.
Michael Moran, chief economist at Daiwa Securities America Inc., said a double-dip recession is unlikely, but noted that the economy remains vulnerable on several fronts.
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