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| Halfway Point: Sales Remain on Strong Track |
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(July 12, 2006) -- An increase in the 30-year fixed mortgage rate over the course of the year will be one of the primary reasons for a decline in home sales in 2006.
The NATIONAL ASSOCIATION OF REALTORS® is forecasting a 12.8-percent decline in new-home sales to 1.12 million this year from 1.28 million a year ago and a 6.7-percent drop in resales to 6.60 million from 7.08 million, although the resale volume still would represent the third-highest level on record.
Freddie Mac, which believes 30-year fixed mortgage rates will average 6.8 percent for the rest of the year, agrees that housing sales are headed for their third best year; but the Federal Reserve's interest-rate-raising campaign continues to loom large. "We remain concerned about the potential impact of higher interest rates in some of the more expensive areas of the country," says David Lereah, chief economist at NAR, which also expects home prices to jump 5.3 percent nationally to $231,300 this year.
Source: Realty Times , Blanche Evans (07/12/06)
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