|Home Sales Rise, New Record Possible
NARWASHINGTON (December 28, 2001) -- The market for existing single-family home sales rose in November and set the stage for a possible record year, according to the National Association of Realtors®.
Existing-home sales increased 0.6 percent to a seasonally adjusted annual rate* of 5.21 million units in November from an upwardly revised pace of 5.18 million units in October. Last month's sales activity was 1.7 percent below the 5.30-million unit pace in November 2000.
Dr. David Lereah, NAR's chief economist, said this is another positive development with housing continuing to stand tall in the U.S. economy. "Existing-home sales have been consistently stronger than expected this year, and we're so close to setting a new record that we really won't know until the December data is available. What's more, we're looking for another strong performance in 2002," he said. "Despite the recession, all the major factors necessary for a strong housing market -- low interest rates, strong household formation and relatively low unemployment -- are continuing to create favorable market conditions," he added.
NAR President Martin Edwards, Jr. said the housing market is gaining the most from low interest rates. "Mortgage interest rates held pretty steady last month, close to the lowest levels we've seen since the 1960's," he said. "With low interest rates and more homes coming on the market, we have an excellent window of opportunity for the first part of the new year -- especially for first-time buyers. However, with the economy projected to improve during 2002, fixed mortgage rates will be ticking up to the 7.2-percent range by the second half of the year, which would place some pressure on lower income borrowers," he explained.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.66 percent in November, up slightly from a record-low 6.62 percent in October; it was 7.75 percent in November 2000. Freddie Mac began tracking commitment rates in 1971.
Housing inventory levels at the end of November rose 6.7 percent from October to a total of 2.08 million existing homes available for sale, which represents a 4.8-month supply at the current sales pace; there were 1.95 million homes available at the end of October, which was a 4.5-month supply. The November inventory level is 11.8 percent higher than November 2000, when 1.86 million homes were on the market, representing a 4.2-month supply.
The national median existing-home price was $147,300 in November, up 5.6 percent from November 2000 when the median price was $139,500. The median is the midpoint, which is a typical market price where half of the homes sold for more and half sold for less.
Regionally, home resales in the West rose 3.8 percent in November to an annual rate of 1.36 million units, but were 8.7 percent below November 2000. The median existing-home price in the West was $193,400, up 2.4 percent from the same month a year earlier.
Existing homes in the Midwest were selling at an annual rate of 1.17 million units in November, the same as in October; the pace was 2.6 percent above November 2000. The median price in the Midwest was $123,400, up 5.3 percent from November 2000.
The existing-home sales pace in the South was unchanged in November with sales continuing at an annual rate of 2.05 million units, and were 2.0 percent above November 2000. The median price of an existing home in the South was $140,200, which was 7.8 percent higher than a year ago.
Existing-home sales in the Northeast dropped 3.1 percent in November to a pace of 630,000 units; the sales rate was 4.5 percent below November 2000. The median existing-home price in the Northeast was $151,700, up 5.5 percent from a year ago.
*The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather.
The next existing-home sales release is scheduled for January 25. The next economic and housing forecast will be released January 8.