David Lereah, NAR's chief economist, said that although home sales will not be able to sustain the break-neck pace experienced during the first two months of the year, factors such as job growth, consumer confidence and a rising number of households will play a large role in taking home sales to another record while overcoming a modest rise in mortgage interest rates. "Even with sales easing off the big numbers at the beginning of the year, we expect existing-home sales to rise 0.3 percent this year to a total of 5.31 million, edging-out the record of 5.30 million in 2001," Lereah said.

A gradual economic improvement should result in generally modest increases in interest rates. "As the economy improves this year, the Federal Reserve will adjust its policy from accommodation and allow short-term interest rates to increase about one percentage point. The rise in mortgage interest rates will be a more modest increase," he said. "Since interest rates are so low right now in historic terms, this will not have much of a breaking effect on housing markets. The 30-year fixed mortgage interest rate should reach 7.5 percent by the end of the year."

Lereah expects new-home sales to decline 4.4 percent to a total of 869,000 units from last year's record of 909,000 units, while housing starts should rise 0.4 percent to a total of 1.61 million units in 2002.

NAR forecasts the national median existing-home price for 2002 to be $155,300, an increase of 5.1 percent over last year. The typical new home price is expected to be $184,700 this year, up 6.1 percent from 2001, in part due to higher lumber prices.

Lereah expects U.S. economic growth, as measured by the Gross Domestic Product (GDP), to be at a growth rate of 5.0 percent for the first quarter of the year, then continue at about a 3.0 percent growth rate for the remaining quarters of 2002. Consumer price inflation for this year will be a modest 1.7 percent.

The association forecasts the unemployment rate to average 5.7 percent this year, while inflation-adjusted disposable personal income should grow about 3.4 percent in 2002. More detailed information about the association's economic outlook, as well as other analysis of real estate industry statistics, can be found in 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 about 800,000 members involved in all aspects of the residential and commercial real estate industries.