WASHINGTON The housing market and economy in the United States have entered into a classic tug-of-war between lower interest rates and slowing economic growth, the National Association of Realtors said on Tuesday.
David Lereah, the trade groups chief economist, said that in the short run the positive impact of lower interest rates wins the battle but that the effects of a slowing economy may win the war. He said the real question is whether the Fed will succeed in orchestrating a soft landing for the economy. Rising energy costs are one of the biggest threats to a soft landing, he added.
Mr. Lereah said the 30-year fixed mortgage interest rates is expected to average 6.9% this year. Existing home sales are projected to rise 2.5% this year, to 5.14 million units, the second-highest total on record, he said, and new-home sales are forecast to hold steady in 2001, at 894,000 units.