Housing prices and sales, which have been somewhat depressed during the last few months, will pick up swiftly near the end of the year, a national economist predicted today.
Housing sales volume will increase and home mortgage interest rates will remain stable at about 12 percent during the next six to nine months, before the housing market "takes off again," said Thomas Harter, chief economist for the Mortgage Bankers Association of American.
Harter made his remarks at the Washington Board of Realtors-Mortgage Bankers Association's 26th annual convention.
Harter said the interest rates on prime conventional loans will be 12 percent nationally by next month and probably won't drop below 11 1/2 percent.
When mortgage interest rates do drop to 12 percent, there will be a "tremendous backlog of mortgage demand that will break," the economist said. He added he already is beginning to see housing sales activity pick up from a slump earlier this year.
"I'd say we're in a hurricane," Harter explained. "We've started the first half, and now we're in the eye. We'll sit in the eye six to nine months and then we'll shoot out the other side."
Herwe also predicted that when demand picks up, many lenders will have trouble gathering enough funds. He said the problem won't be lack of business but how the business is done. How will you get enough money to take care of the demand? Volume will pick up significantly after the end of this year."
A big increase in sales is expected around October, Harter said, followed by a slacking off of demand. Sales will pick up again, however, in the traditional late-spring housing boom.
Harter predicted a mild economic recovery for the nation late this year. The consumer price index will run about 10 percent or a little lower within the next few months if there is no dramatic increase in oil prices, he estimated.
Because many farmers had financing problems this year and were unable to lease some of their land, food prices probably will rise in a year or two, Harter added.