January Existing-Home Sales Jump To New Record, NAR
February 25, 2002
WASHINGTON? Existing single-family home sales surged in January and reached an unprecedented monthly high, according to the National Association of Realtors. This is the first time sales have reached the six million mark and is also the largest monthly increase on record.
Existing-home sales jumped 16.2 percent to a seasonally adjusted annual rate* of 6.04 million units in January from a pace of 5.20 million units in December. Last month's sales activity was 14.6 percent above the 5.27-million unit pace in January 2001; the previous monthly record was an annual rate of 5.49 million units in August 2001. The previous largest monthly increase was 13.0 percent in May 1995.
David Lereah, NAR's chief economist, said low interest rates are only part of the picture and that many other factors are contributing to record sales. "We've had favorable housing affordability conditions for some time, but what's new is the effect of a gradual increase in consumer confidence combined with a turnaround in the economy. As a result, some people who've held back from major commitments over the last few months have entered the housing market," he said. "In addition, we've had unseasonably mild weather in much of the country that has encouraged potential buyers to move from shopping on their computers to visiting real estate offices and homes for sale."
"In January, consumer confidence on expectations for the future was the highest in 13 months," Lereah said. "Since purchasing a home is a long-term investment, this bodes well for the continuing strength of the housing market this year."
NAR President Martin Edwards Jr. said long-term demographic trends also are contributing to record sales. "The United States attracts a large number of immigrants at the same time children of the baby boom are entering their prime years for buying a home. The result is a growing number of households with the same goal in mind ? the American dream of homeownership," he said. "The economics of housing as an investment is yet another factor. There have been reports lately about rising home values continuing to surpass returns in the stock market, making housing and even sounder investment."
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 7.00 percent in January, down from 7.07 percent in December; it was 7.03 percent in January 2001.
Housing inventory levels rose 11.4 percent at the end of January 2002 with 2.05 million existing homes available for sale, which represents a 4.1-month supply at the current sales pace. Inventory levels are 13.9 percent higher than the 1.80 million homes available in January 2001.
The national median existing-home price was $151,100 in January, up 10.2 percent from January 2001 when the median price was $137,100. 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 surged 23.3 percent between December and January to an annual rate of 1.64 million units; it was 16.3 percent higher than January 2001. The median existing-home price in the West was $199,900, up 13.5 percent from the same month a year earlier.
Existing-home sales in the Northeast grew by 16.4 percent from December to a pace of 710,000 units in January; the rate was 9.2 percent above January 2001. The median existing-home price in the Northeast was $149,300, up 4.1 percent from a year ago.
The existing-home sales pace in the South rose 16.1 percent in January to an annual rate of 2.38 million units; the pace was 13.3 percent stronger than January 2001. The median price of an existing home in the South was $144,800, which was 12.5 percent higher than a year earlier.
In the Midwest, existing homes were selling at an annual rate of 1.31 million units in January, up 8.3 percent from December. The pace was 17.0 percent higher than January 2001. The median price in the Midwest was $128,700, up 5.3 percent from January 2001.
Source: National Association of Realtors