NAR: Expensive Oil = Strong Home Sales

Higher oil prices are likely to restrain economic growth, causing mortgage interest rates to rise less than expected and home sales to remain strong through next year, according to the National Association of Realtors.The forecast, released at the start of the NAR's Midyear Legislative Meetings & Trade Expo in Washington, calls for the 30-year fixed mortgage rate to rise gradually to 6.4% in the fourth quarter and then average about 6.8% in 2006. "The essentially sideways movement in mortgage interest rates recently has defied the consensus of earlier forecasts, with only a modest uptrend detectable over time," said David Lereah, the NAR's chief economist. "The simple effect, in an economy with an improved labor market, is a higher demand for homes." The NAR can be found online at http://www.realtor.org.