Strong Resales Housing Market Predicted Through Year 2000

So 1996 was hot. But what about the rest of this decade?

March 1, 1997

If the economists are correct, real estate practitioners can look forward to a strong housing market through the turn of the century. With moderate interest rates predicted along with steady economic growth and low inflation, first-time homebuyers and move-up purchasers will spur a generous amount of activity from 1997 through the year 2000.

"I see things being very stable," says John Tuccillo, chief economist for the NATIONAL ASSOCIATION OF REALTORS®. "Housing demand is relatively good, so we'll see annual home resales reach from 3.5 million to 3.8 million units. It's a very stable outlook."

David Lereah, chief economist for the Mortgage Bankers Association of America, says interest rates will hover at 8 percent throughout 1997, will rise slightly to 8.2 percent next year, and dip to just under 8 percent in 1999 and 2000.

"We're going to assume a moderate pace" of economic growth, he says. "It's the maturing stage of the expansion, so maybe the economy will lose a little steam and the rates come down a bit."

Lereah also predicts that existing-home sales will dip, from 3.8 million this year to about 3.7 million for each of the remaining years in this decade.

David Berson, chief economist for Fannie Mae, says he believes that immigrants will fuel the housing market in the late 1990s, a decade after near record numbers came to this country. "The market is buoyed increasingly by immigrants," he says, adding that after they've been in the U.S. 10 years, "their homeownership rate climbs rapidly."

"More and more immigrants will continue buying homes to the end of this century," he says. "A lot of sales will continue to be resales."

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