Economist Sees Rate Peak at 7%

Private economist Robert Genetski is forecasting that mortgages rates will peak at 7% next summer, but that sales of single-family existing homes will remain at this year's level.The Federal Reserve Board will raise the federal funds rate to 5% in order to fight inflationary pressures caused by rebuilding in the hurricane-stricken Gulf Coast, Mr. Genetski told the Title/Appraisal Vendor Management Association conference in Washington. But despite rising mortgage rates, he said he expects single-family existing-home sales to level off at around 6 million in 2006. For the first nine months of 2005, the pace of single-family resales is averaging 6.2 million. Meanwhile, the Saugatuck, Mich.-based economist is projecting that house prices will continue to rise until the early part of next year. "Then they will moderate, and we will see increases in housing prices somewhere between 2% to 5% a year," he said. Mr. Genetski describes himself as an "optimistic" economist who believes in classical economic theory. His firm is called Classicalprinciples.com.