Existing-Home Sales Stay in Record Territory
March 25, 2002
WASHINGTON ? Sales of existing single-family homes slipped last month from a record pace in January, but remain at the second-highest level since record keeping began in 1968, according to the National Association of Realtors.
Existing-home sales edged down 2.8 percent in February to a seasonally adjusted annual rate* of 5.88 million units from an upward-revised level of 6.05 million units in January. Last month's sales activity was 11.6 percent above the 5.27-million unit pace in February 2001. Prior to January, the highest monthly pace on record was an annual rate of 5.49 million units, recorded in August 2001.
David Lereah, NAR's chief economist, said the February data exceed expectations. "At first glance this level of activity doesn't seem sustainable, but strong market fundamentals and good weather have given us some unusually strong levels of existing-home sales," Lereah said. "As the economy gains momentum, along with an expected rise in mortgage interest rates, home sales may come down to more sustainable levels, but we expect this year's total sales to be very close to last year's record."
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.89 percent in February, down from 7.00 percent in January; it was 7.05 percent in February 2001.
NAR President Martin Edwards Jr. said favorable affordability conditions are contributing to exceptionally strong home sales. "Obviously, low mortgage interest rates are the key to a strong housing market, but rising consumer confidence and a growing number of households bode well for the future," he said.
The national median existing-home price was $150,000 in February, up 8.2 percent from February 2001 when the median price was $138,600. The median is the midpoint, which is a typical market price where half of the homes sold for more and half sold for less.
Lereah said lean housing inventories are placing pressure on home prices. "The supply of homes on the market is historically low, with multiple buyers competing for the same house in many areas across the country," he said. "We expect the balance between buyers and sellers to improve as the year progresses, so we are forecasting the median price to generally increase 5.1 percent this year."
Housing inventory levels at the end of February stood at 2.08 million existing homes available for sale, which represents a 4.2-month supply at the current sales pace ? the same as in January. Raw inventory numbers are 10.1 percent above the 1.89 million homes available in February 2001, which was a 4.3-month supply. "We generally need to have a five-to-six month supply to have a balanced market between buyers and sellers," Lereah explained.
Regionally, existing-home sales in the Northeast rose 1.4 percent from January to a pace of 720,000 units in February, which was a new record. The rate was 14.3 percent above February 2001. The median existing-home price in the Northeast was $156,600, up 9.7 percent from a year ago.
In the Midwest, homes were reselling at an annual rate of 1.30 million units in February, down 0.8 percent from January. However, sales were 14.0 percent above February 2001. The median price in the Midwest was $130,100, up 6.1 percent from a year ago.
Home resales in the West declined 3.7 percent from January to an annual rate of 1.58 million units in February, but the pace was 12.9 percent above February 2001. The median existing-home price in the West was $196,200, up 7.4 percent from the same month a year earlier.
The existing-home sales pace in the South fell 4.2 percent in February to an annual rate of 2.29 million units; they were 8.5 percent above February 2001. The median price of an existing home in the South was $139,400, which was 8.5 percent higher than February 2001.
Source: National Association of Realtors