Housing continues to be the primary engine providing impetus to
the nation's slowly recovering economy, as low interest rates,
favorable demographics and appreciating home prices continued to
fuel growth and positive forecasts through the summer. Among the
key statistics released by government agencies, research firms and
industry-related trade associations in recent weeks were the
NEW- AND EXISTING-HOME SALES
The volume of home sales this year will be stronger than earlier projected and should "easily surpass" the record set in 2002, according to the National Association of Realtors. David Lereah, chief economist for the Washington, DC-based NAR, said that historically low mortgage interest rates are the primary factor behind the record-setting sales pace. "Lower-than-expected mortgage interest rates have brought more buyers into the housing market, offsetting sluggish economic growth and weakness in the labor markets," he said. The NAR is forecasting 5.73 million existing-home sales this year, up 2.9% from a record 5.57 million sales last year; at the same time, new-home sales should rise 3.1% from last year's record, to 1 million units, the NAR said (see related graph, above right). Spurred by the lowest long-term mortgage rates since 1956, sales of new single-family homes rose to a second consecutive record-breaking high in June, at a seasonally adjusted annual rate of 1.16 million units, the Commerce Dept. reported. NAR President Cathy Whatley said the timing of low interest rates coincides with strong housing demand by young households, as well as by immigrants and minorities. "Echo boomers the children of the baby boom generation are entering the age for buying a first home," she said. "In fact, four out of 10 buyers are purchasing their first home, which is providing liquidity to sellers that in turn boosts other sectors of the market." Lereah noted, however, that mortgage interest rates "appear to have reached bottom," and are likely to rise slowly by the end of the year.
Housing "continues to do the heavy lifting in an otherwise sluggish economy," with the outlook for the balance of 2003 remaining "bright," the National Association of Home Builders (NAHB) said last month. "People are viewing housing as a good place to put their money because of the low interest rates and solid house-price performance," said David Seiders, chief economist of the Washington, DC-based NAHB. "This pace of activity should continue, even as interest rates begin to inch up." Builder confidence in the market for single-family homes remained solid through July, with the outlook for the remainder of the year particularly high, the NAHB also reported. "Builders remain confident, as favorably low interest rates on home mortgages and solid price performance continue to stimulate home-buying," said association president Kent Conine, adding that builder expectations for home sales through the remainder of the year "are high throughout the country."
CABINET & VANITY SALES
Sales of kitchen cabinets and bathroom vanities increased 8.9% in June compared to the same month a year earlier, the Kitchen Cabinet Manufacturers Association said last month.
The Reston, VA-based KCMA noted that manufacturers participating in the association's monthly "Trend of Business" survey reported that year-to-date sales through June were up 9.1% over sales during the same six-month period last year.