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OUTLOOK SHOWS BEST HOUSING MARKET IN 14 YEARS, ACCORDING TO THE NATIONAL ASSOCIATION OF REALTORS

 MIAMI, Nov. 15 /PRNewswire/ -- The lowest interest rates since the late 1960s, improving confidence and demand from young people who postponed home buying in the 1980s, are combining to create the strongest housing market since 1979, according to the latest real estate outlook from the National Association of Realtors (NAR).
 In a news briefing here, during NAR's 86th Annual Convention and Trade Exposition, John A. Tuccillo, the association's chief economist, said the nation is entering a period of slow economic growth. "With low inflation, mortgage interest rates are drifting down," he said. "A year from now, we expect the 30-year fixed rate mortgage to be a quarter to a half of a percentage point lower than it is now," he added.
 At the same time, NAR says more modest increases in home prices are likely. "For the next few years, we expect home prices to increase at the rate of inflation, plus about a percentage point," Tuccillo said. Consumer price inflation will be about 2.6 percent in 1994, while the median existing-home price is expected to rise 3.8 percent.
 Existing-home sales are the brightest spot in the housing market. "We're expecting 3.7 million sales this year, up 5 percent from 1992 and a little more than 3.8 million sales in 1994, which will make these the two best years for housing since 1979," he said.
 Housing starts are expected to rise 3 percent to a total of 1.24 million this year, then rise to 1.3 million in 1994. New-home sales should rise 4 percent to 634,000 units in 1993, before rising to 646,000 units next year. "Mid-sized builders continue to have difficulties in getting construction loans, which is dampening the construction market," he said.
 Home sales are being driven to a great extent by first-time buyers, who were frozen out of the market during the 1980s. "We estimate there were 2.5 to 3 million young people who would have purchased their first home in the 1980s if affordability conditions were better," Tuccillo explained. "This is why first-time buyers are making up 40 to 50 percent of the market, where historically entry-level buyers accounted for only a third of the market. These people will be a driving force in home sales for the next few years -- but the trade-up market, which has been somewhat sluggish this year, will pick up, as well," he said.
 The Midwest and the South continue to be the strongest regions, but inland areas of the West have shown quite a bit of growth, as well, this year. "If you look at the spine of the Rockies and take a left to the Pacific Northwest, you'll see some very strong housing markets," Tuccillo said. The Northeast has bottomed out and is showing improvement but recessionary conditions remain in southern California, he added.
 The National Association of Realtors, "The Voice for Real Estate," is the nation's largest trade association, representing nearly 750,000 members involved in all aspects of the real estate industry.
 -0- 11/15/93
 /CONTACT: Walter Molony, 202-383-1177, Scott Sherwood, 202-383-1016, or Trisha Morris, 202-383-7560, all of the National Association of Realtors/


CO: National Association of Realtors ST: Florida IN: FIN CST SU:

DT-MH -- DC021 -- 4547 11/15/93 14:37 EST
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Publication:PR Newswire
Date:Nov 15, 1993
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