Existing-Home Sales Hit Record in November
December 29, 2004
Low interest rates helped the market for existing single-family home sales to set the highest monthly pace on record in November, according to the National Association of Realtors®.
Existing-home sales increased 2.7 percent to a seasonally adjusted annual rate* of 6.94 million units in November from an upwardly revised pace of 6.76 million units in October. Last month's sales activity was 13.2 percent above the 6.13-million unit level in November 2003. The previous record was 6.92 million in June 2004.
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David Lereah, NAR's chief economist, said low interest rates get much of the credit. "Mortgage interest rates dropped a quarter of a percentage point in late summer and then stabilized," he said. "Coupled with a growing labor market and a rising economy, this created optimal conditions for the housing sector."
Lereah expects economic conditions in 2005 will be comparable with this year. "Our forecast for the housing market is for a continuation of strong home sales, although down a little from the record-setting pace of 2004," he said. "We think slower sales will help to create a better balance between home buyers and sellers, but with tight inventories of homes available for sale, price appreciation hasn't slowed yet."
The national median existing-home price was $188,200 in November, up 10.4 percent from November 2003 when the median price was $170,500. The median is a typical market price where half of the homes sold for more and half sold for less.
Housing inventory levels at the end of November rose 2.1 percent from October to a total of 2.48 million existing homes available for sale, which represents a 4.3-month supply at the current sales pace.
NAR President Al Mansell, CEO of Coldwell Banker Residential Brokerage in Salt Lake City, said the good news is that mortgage interest rates remain historically low. "Although mortgage interest rates should rise modestly over the course of the next year, they'll stay low enough to preserve favorable market conditions," he said. "Low interest rates are helping new buyers to enter the market. This growth in homeownership is stimulating all steps of the housing ladder by creating a ready market for existing owners wishing to make a trade, and underscores the value of housing as an investment."
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.73 percent in November, almost unchanged from 5.72 percent in October; it was 5.93 percent in November 2003.
Regionally, existing-home sales in the West jumped 6.5 percent to a record annual rate of 1.97 million units in November, and were 16.6 percent higher than November 2003. The median existing-home price in the West was $274,000, up 13.3 percent from the same month a year earlier.
The home resale pace in the South rose 1.8 percent in November to a record level of 2.83 million units, and was 15.5 percent above a year ago. The median price of an existing home in the South was $170,000, which was 10.1 percent higher than November 2003. Existing-home sales in the Midwest increased 0.7 percent in November to an annual rate of 1.39 million units, and were 9.4 percent above November 2003. The median price in the Midwest was $151,200, up 6.6 percent from the same month a year earlier.
Existing-home sales in the Northeast declined 1.3 percent in November to a pace of 740,000 units, but were 4.2 percent higher than a year ago. The median existing-home price in the Northeast was $226,700, up 17.3 percent from November 2003.
Source: The National Association of Realtors