Sales of existing single-family homes in California will reach a record 633,490 units in 2005, a 1.4 percent increase from the previous year's record pace, driven by lower-than-expected mortgage interest rates, according to the California Association of Realtors.
The group's mid-year housing market forecast, released Wednesday, predicts that the median price will hit a record statewide of $523,150 this year, a 16 percent increase from 2004's record $450,990. CAR. also projected that the state's Housing Affordability Index the percentage of people who can afford to purchase a median-priced home will decline to 16 percent in 2005, from 20 percent in 2004.
CAR said lower-than-expected mortgage rates will help offset the impact of rising home prices. The industry group expects 30-year, fixed mortgage interest rate to end the year at 5.9 percent, with the one-year adjustable rate mortgage at 4.4 percent.
"Homebuyers concerned that today's favorable interest rate environment may not last are eager to purchase a home, while the inventory of homes for sale remains low," said CAR Vice President and Chief Economist Leslie Appleton-Young.
CAR's 2006 housing market outlook will be released in October.
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