Almost every speaker agreed that housing construction in 2003 will likely equal or slightly surpass last year’s 1.7 million units, with single-family activity remaining especially strong and multifamily production thinning only slightly. One reason given was that the Federal Reserve is unlikely to increase interest rates until late in the year, or possibly not until early next year. As a result, long-term mortgage rates in 2003 will be about half a percentage point lower, on average, than they were in 2002, climbing only slowly from around 5.8 percent as the year progresses.
However, while housing has contributed to growth in the nation’s economy through the past recession and into the current period, NAHB’s chief economist, David Seiders, stated that one question for the economy is what will happen when housing activity tapers off and is no longer a “growth engine” for gross domestic product. He noted that the housing component of GDP grew 12 percent in this year’s first quarter — faster than any other part of the economy. “Residential fixed investment accounted for fully one-third of total GDP growth in 2003’s first quarter, even more than the substantial support it provided in 2002,” he said.