December 19, 2003

Institute releases new regional housing forecast

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Housing prices in the Sacramento Region will see just a slight increase next year as demand for housing in the area declines from this year’s records, according to the new CSUS Forecast: Housing Sector Outlook unveiled today by the California Institute for County Government at California State University, Sacramento.

The forecast says the housing market will be dragged down by job losses in the region and rising interest rates. Even so, it says that the overall housing sector will remain a strong part of the local economy.
The forecast predicts sales of new and existing homes will drop this quarter after a record third quarter, and that sales will remain brisk through next year.

It also predicts that the median price of new and existing homes will rise slightly. The forecast says the median price of new homes, which will finish 2003 at an annual average of about $300,000, will reach $307,000. It says the median price of existing homes, now at an annual average of about $208,000, will reach an average of $220,000 in 2004.

The CSUS Forecast: Housing Sector Outlook is initially expected to be produced twice a year. Like the CSUS Forecast of the region’s job outlook, it is based on an econometric model of the six-county Capital Region, which incorporates data from more than two dozen separate economic variables.

Matthew Newman, the institute’s director, says the new housing outlook grew out of the group’s CSUS Forecast of the Sacramento Region, which comes out quarterly.

“Housing and construction employment have become important pillars of the local economy, helping the region to outperform the rest of the state during the recent downturn,” Newman says. “As we look ahead and prepare our forecasts, it has become increasingly difficult to answer questions about the overall health and direction of the economy without simultaneously understanding the outlook for housing.”

More information is available from Matthew Newman, director of the California Institute for County Government, at (916) 324-0796, or at the institute’s website at www.cicg.org. Additional media assistance is available by contacting CSUS public affairs at (916) 278-6156.

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