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he National Association of Home Builders, Washington, D.C., predicts that higher interest rates will pull the housing market back from this year’s record level to that experienced in 2003. NAHB is looking for fixed mortgage rates to increase from 5.9% this year to 6.5% next year and then move up to 7.1% by 2006. Adjustable rate mortgages will rise from 3.9% to 5.2% and then 6.3% during the same period. "The housing market has been nothing short of phenomenal," says David Seiders, NAHB’s chief economist. But the nation’s housing market is in the process of "reaching its limits" and "topping out," says Seiders, who predicts that single-family housing starts will decline 4.4% next year to 1.523 million units. NAHB predicts that will be followed by another 3.5% decline in 2006. The downturn in starts for multifamily units is expected to be shorter and milder, with NAHB forecasting a 3.5% decline next year to 330,000 units. NAHB expects the multifamily housing market to stay at this level through 2006. Despite the downturn, Seiders says the fundamentals of the housing market "remain good, even though some households may have moved up home-buying plans to this year when they saw mortgage rates rising."