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Existing-Home Sales Down but Still Historically High in January 2004

February 25, 2004

WASHINGTON  ? Sales of existing single-family homes were down in January from near-record highs but remain exceptionally strong, according to the National Association of Realtors®.

Existing-home sales declined 5.2 percent in January to a seasonally adjusted annual rate* of 6.04 million units from a downwardly revised level of 6.37 million in December, which was the third highest pace on record. Last month's sales activity was 2.0 percent above the 5.92 million-unit pace in January 2003. The record was a 6.68 million sales rate in September 2003.

David Lereah, NAR's chief economist, said monthly changes at this volume of home sales are relative. "We have to keep in mind that the level of home-sales activity over the last six months has been the strongest on record," he said. "The January pace was the sixth-highest ever and is above the total forecast for this year. We can expect month-to-month ups and downs, but the long-term trend is for home sales to stay close to record territory this year.

"Given the high level of sales in January, it's hard to read much into a monthly decline. However, unusually bad weather in much of the country may have postponed some sales," Lereah said.

NAR President Walt McDonald, broker-owner of Walt McDonald Real Estate in Riverside, Calif., said low interest rates are an obvious factor in the good sales performance. "Strong household formation and an improving economy create housing demand," he said. "The continuing low level of mortgage interest rates is icing on the cake for the housing market."

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.71 percent in January, down from 5.88 percent in December; it was 5.92 percent in January 2003. "On an annual basis, we have to go back to the early 1960s to see mortgage interest rates where they are today," McDonald said.

The national median existing-home price was $168,700 in January, up 5.4 percent from January 2003 when the median price was $160,000. The median is a typical market price where half of the homes sold for more and half sold for less.

Housing inventory levels declined 4.3 percent at the end of January with 2.20 million existing homes available for sale, which represents a 4.4-month supply at the current sales pace.

Regionally, existing-home sales in the South rose 2.0 percent from December to an annual rate of 2.60 million units in January, and were 6.1 percent higher than a year ago. The median price of an existing home in the South was $155,500, which was percent 4.3 higher than January 2003.

The home resale pace in the West declined 5.7 percent to an annual rate of 1.64 million units in January; however, the pace was 4.5 percent stronger than January 2003. The median existing-home price in the West was $234,500, up 7.9 percent from the same month a year earlier.

In the Northeast, existing-home sales fell 12.5 percent from December to a pace of 630,000 units in January, and were 6.0 percent below the level in January 2003. The median existing-home price in the Northeast was $212,300, up 17.2 percent from a year ago.

Homes in the Midwest were reselling at an annual rate of 1.18 million units in January, down 13.2 percent from December, and were 3.3 percent below January 2003. The median price in the Midwest was $134,300, up 1.5 percent from a year earlier.

Source: The National Association of Realtors®

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