Most States See Home Sales Near Record in Second Quarter 2002
August 14, 2002
WASHINGTON -- Strong demand and favorable affordability conditions kept total existing-home sales at exceptionally high levels in the second quarter of 2002, with 34 states and the District of Columbia posting increases from a year ago, according to the NATIONAL ASSOCIATION OF REALTORS®.
The NAR survey showed that nationwide, the seasonally adjusted annual rate* of existing single-family, apartment condominium and co-operative home sales totaled 6.37 million units in the second quarter of this year, up 4.4 percent from the 6.11 million-unit pace in the second quarter of 2001. This was the second highest annual rate since NAR started tracking the total state resale series in 1981, and is only 2.7 percent below the record pace of 6.55 million units in the first quarter of this year.
Total sales rose by double-digit rates in nine states in the second quarter compared to the same quarter in 2001. Fourteen states reported a decline in the resale rate, while two states saw no change in comparison with a year ago.
Lereah: Slowing Trend Expected
David Lereah, NAR's chief economist, said a slowing trend is expected. "After the record surge in the first quarter – which got a boost from unseasonably mild weather – it was clear existing-home sales wouldn't stay at unprecedented high marks, but we are seeing the market coasting at somewhat lower but still historically high levels of sales activity," he said. "Solid housing market fundamentals including low mortgage interest rates, the needs of a growing population, and generally good employment mean that home sales activity will continue to be strong and beneficial for the overall economy."
According to Freddie Mac, the average commitment rate on a 30-year conventional fixed-rate mortgage was 6.82 percent in the second quarter, down from 6.97 percent in the first quarter; it was 7.13 percent in the second quarter of 2001.
NAR President Martin Edwards Jr. said the association still expects an annual sales record. "The first half of this year was the highest six-month period of home sales on record," he said. "Even with slowing sales we'll easily set a new annual record this year, and 2003 is forecast to be close to the second-strongest on record." Edwards is a partner in Colliers Wilkinson & Snowden Inc., Memphis, Tenn.
The strongest year-to-year increase was in California, where the second quarter resale pace rose 20.1 percent compared to the second quarter of 2001. Next came Hawaii, which rose 15.7 percent from a year ago. Maine posted the third highest increase, up 14.1 percent from last year's second quarter rate.
Highest Increases in West
Regionally, the West experienced the highest increase in the second quarter, recording a sales rate of 1.76 million units, up 7.9 percent from a year ago. After California and Hawaii, the next highest increase was in Nevada, where existing-home sales rose 9.3 percent. Utah resales were up 4.3 percent.
In the Northeast, the total existing-home sales pace of 777,000 units in the second quarter was 3.9 percent higher than a year ago. Leading the region was Maine, where existing-home sales rose 14.1 percent from the second quarter of 2001. Vermont sales activity increased 11.9 percent, Massachusetts rose 10.9 percent and New Jersey's pace was up 8.9 percent.
The South, with a resale rate of 2.58 million units, posted a 3.0 percent rise for the second quarter of 2002 compared to the same quarter a year ago. The strongest increase was in Alabama, where the resale pace was 12.4 percent higher than the second quarter of 2001. Kentucky was up 11.0 percent, Delaware increased 10.1 percent and Mississippi rose 7.7 percent.
The Midwest, with a 1.26 million-unit annual rate, recorded a 2.7 percent increase in home resales for the second quarter compared with a year earlier. South Dakota had the highest increase in the region with a gain of 12.9 percent in resale activity compared to the same period in 2001, followed by Indiana with a gain of 7.0 percent. North Dakota existing-home sales rose 6.6 percent, followed by Michigan, where sales activity increased 5.7 percent, and Wisconsin, up 5.6 percent.
* The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative sales pace for that quarter was maintained for four consecutive quarters. Total home sales include single family, townhomes, condominiums and co-operative housing. This differs from NAR's monthly series on existing-home sales, which is based only on single-family homes (detached and townhomes).
Seasonally adjusted rates are used in reporting quarterly data to factor out seasonal variations in resale activity. For example, sales volume normally is higher in the summer and relatively light in winter, primarily because of differences in the weather.
Source: NATIONAL ASSOCIATION OF REALTORS®