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Existing-Home Sales End 2003 on Strong Note, Set Annual Record

January 26, 2004

WASHINGTON – Existing single-family home sales jumped from November to December while overall sales in 2003 easily surpassed the previous record in 2002, according to the National Association of Realtors®. There were a total of 6,100,000 existing-home sales in 2003, up 9.6 percent from the previous record of 5,566,000 in 2002. NAR began tracking the sales series in 1968.

Existing-home sales increased 6.9 percent in December to a seasonally adjusted annual rate* of 6.47 million units from a level of 6.05 million units in November. Last month's sales activity was 8.9 percent higher than the 5.94-million unit level in December 2002 and was second only to a record 6.68 million-unit pace in September 2003.

David Lereah, NAR's chief economist, said the housing market continues to offer surprises. "We've been expecting the pace of home sales to ease, and a decline in November seemed to indicate a more sustainable pace, but the rebound in December – the second highest monthly pace on record – shows there's still a lot of life in this market," he said. "The biggest factor is a resumed decline in mortgage interest rates, which have been much lower than most analysts expected."

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.88 percent in December, down from 5.93 percent in November; it was 6.05 percent in December 2002. The average 30-year rate for all of 2003 was 5.83 percent, the lowest annual average since Freddie Mac started tracking interest rates in 1971.

NAR President Walt McDonald, broker-owner of Walt McDonald Real Estate in Riverside, Calif., said favorable housing affordability conditions will continue. "Mortgage interest rates have eased even further in recent weeks and we're not expecting any big changes over the next few months," he said. "Given the demand from a growing number of households in an improving economy, we can expect sales to remain close to record activity this year."

Housing inventory levels fell 7.3 percent at the end of December with 2.30 million existing homes available for sale, which represents a 4.3-month supply at the current sales pace. However, inventories were 8.0 percent higher than December 2002 when there were 2.13 million homes available.

The national median existing-home price was $173,200 in December, up 6.7 percent from December 2002 when the median price was $162,400. The median is a typical market price where half of the homes sold for more and half sold for less.

For all of 2003, the median price was $169,900, up 7.5 percent from a median of $158,100 in 2002. This is the strongest annual increase since 1980 when the median price rose 11.7 percent.

Regionally, existing-home sales in the Midwest jumped 9.4 percent from November to an annual rate of 1.39 million units in December, and were 3.7 percent above December 2002. The median price in the Midwest was $141,900, up 3.4 percent from a year ago.

The home resale pace in the West rose 7.9 percent from November to an annual rate of 1.77 million units in December, and was 10.6 percent stronger than December 2002. The median existing-home price in the West was $248,300, up 16.4 percent from the same month a year earlier.

Existing-home sales in the South increased 5.3 percent in December to an annual rate of 2.58 million units, and were 10.7 percent higher than a year ago. The median price of an existing home in the South was $158,900, which was 4.2 percent higher than December 2002.

In the Northeast, existing-home sales rose 2.9 percent from November to a pace of 720,000 units in December, and were 9.1 percent higher than December 2002. The median existing-home price in the Northeast was $192,600, up 11.4 percent from a year earlier.

Soure: The National Association of Realtors

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