The Washington Post
July 28, 2004
By: Sandra Fleishman
National statistics released this week show the market is still cooking despite some predictions that rising interest rates and unsustainable prices could bring the years-long climb to an end.
Yesterday the Commerce Department said new-home sales in June were down from the record set in May. June's seasonally adjusted annual rate of 1.33 million sales was 0.8 percent below the revised May estimate of 1.34 million but 11 percent above a year earlier.
Many economists had expected home sales to slacken significantly because of rising mortgage interest rates in April and May and because of concern that prices are outpacing inflation.
Frank E. Nothaft, chief economist for Freddie Mac, noted that he still expects records this year for new-home sales, existing-home sales and construction starts because of the strong first five months. But he and others have predicted a return to more normal sales numbers later in the year.
"Before we say the housing boom is over, I prefer to see two or three months of housing data all pointing in the same direction," Nothaft said. "We haven't seen that yet."
Locally, said George Mason University regional economist Stephen S. Fuller: "The party's definitely not over, not with 82,000 new jobs so far this year."
He said that "there is enormous pent-up demand here" that will take years to meet.
If the market does slow, he said, "I don't think our builders will notice because they're so busy."
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