Housing Bubble

Homeownership and housing strength to continue through 2003

July 10, 2003

WASHINGTON, /PRNewswire/ -- Today in a Homeownership Alliance- sponsored conference call with financial analysts and reporters, the nation's leading homeownership and housing sector economists predicted a record-setting year for housing -- benefiting individuals, communities and the economic growth of the nation.

The economists from Homeownership Alliance member organizations -- the Independent Community Bankers of America, Fannie Mae, Freddie Mac, the National Association of Home Builders and the National Association of Realtors® -- cited home sales, mortgage originations, low interest rates and rising home builder confidence as the reasons for the bright outlook for the remainder of 2003. All of these factors have contributed to the significant impact homeownership and housing have had on the nation's economy.

"Fannie Mae predicts record home sales and mortgage originations in 2003," said Fannie Mae's chief economist, David W. Berson.

Frank Nothaft agreed 2003 would be a record-setting year for mortgage originations. "Mortgage originations will set another record volume in 2003, with single-family volume exceeding last year's level by at least one-third. By year-end, about one-half of all mortgage debt will have been originated during this year. The sluggish economy has caused a gradual rise in loan delinquencies; delinquencies will not decline until employment growth accelerates," said Nothaft, chief economist for Freddie Mac.

Low interest rates have contributed to the record number of mortgage originations and will continue to help homeownership and housing boost the economy.

Paul Merski, chief economist for the Independent Community Bankers of America, said, "The powerful enticement of historically low mortgage rates will continue to fuel robust refinancing activity, boost family cash flow, and support added consumption in the second half of 2003."

Low interest rates have allowed more Americans to become homeowners than at any other time. The national homeownership rate is at 68 percent.

"Existing home sales have been on a torrid pace and will easily set a new record in 2003. Sales will rise by 3% from a year ago. Strong demand in combination with tight supply has continued to push up home prices. Existing home prices are projected to appreciate solidly by 6%, which translates into about $10,000 in housing wealth accumulation for a typical homeowner in 2003," said Lawrence Yun, senior economist for the National Association of Realtors®.

"Healthy house-price performance, continuing low mortgage rates, the expected effects of the economic stimulus bill and solid builder confidence readings taken from our latest Housing Market Index survey are all excellent indicators that the housing industry will remain a strong and stable sector of the economy throughout the second half of 2003 and heading into 2004," said National Association of Home Builders chief economist David Seiders.

The economists agreed that during 2003, the housing and mortgage markets were instrumental in supporting the broader economy, and refinancing provided an important element for economic growth.

Based in Washington, D.C., the Homeownership Alliance is a coalition of more than a dozen organizations committed to ensuring support for the American housing system. Members include Consumer Federation of America, The Council of Insurance Agents & Brokers, The Enterprise Foundation, Fannie Mae, Freddie Mac, Habitat for Humanity International, Independent Community Bankers of America, Independent Insurance Agents & Brokers of America, Local Initiatives Support Corporation, National Association of Hispanic Real Estate Professionals, National Association of Home Builders, National Association of Mortgage Brokers, National Association of Real Estate Brokers, National Association of Realtors(R), World Floor Covering Association, National Bankers Association, National Council of La Raza, and National Urban League.

Source: Homeownership Alliance