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Total State Existing-Home Sales Shy of Record, NAR Reports

May 13, 2004

WASHINGTON – An improving economy, low mortgage interest rates and a large underlying demand for housing kept total state existing-home sales near record levels in the first quarter. Forty-two states and the District of Columbia experienced sales increases in comparison with the first quarter of 2003, according to the National Association of Realtors.

NAR's latest report on sales of previously owned single-family homes, condominiums and co-operatives showed that total sales rose by double-digit rates in 22 states and the District of Columbia in the first quarter of this year compared to the same quarter in 2003. Seven states reported generally modest declines in the annual rate of sales activity from a year ago, while complete data for one state, Vermont, was not available.

Nationwide, the seasonally adjusted annual rate* of total existing home sales reached 7.14 million units in the first quarter, the third highest on record, up 7.2 percent from a pace of 6.66 million units in the first quarter of 2003. The record was a rate of 7.36 million units in the third quarter of 2003, followed by 7.24 million in the fourth quarter of last year. NAR started tracking the total state resale series in 1981.

David Lereah, NAR's chief economist, said the housing market has reached a new plateau. "Over the last few years, it's become apparent that the level of home sales will generally remain at higher levels than what was common in the mid-1990s," he said. "The fundamental change is a growing population with a rising number of households entering the age in which people typically buy their first home. In short, we have the need, desire and ability for people to buy homes."

NAR President Walt McDonald, broker-owner of Walt McDonald Real Estate in Riverside, Calif., said historically low mortgage interest rates have been a major factor in strong home sales. "Although interest rates have risen in the last month, they're still historically low. One concern we have is for low- and moderate-income families who are hurt the most by rising interest rates – we need to preserve programs that can help families at all income levels to get into homes," he said.

According to Freddie Mac, the national average commitment rate for a 30-year conventional fixed-rate mortgage was 5.60 percent in the first quarter – the second lowest on record – down from 5.92 percent in the fourth quarter; the rate was 5.84 percent in the first quarter of 2003. The lowest quarterly average was 5.51 percent in the second quarter of 2003; the series began in 1971.

The strongest year-to-year increase was in Nevada, where the first quarter resale pace jumped 44.3 percent compared with the first quarter of 2003. Alaska rose 30.5 percent from a year ago, while Alabama posted the third highest increase, up 28.6 percent from last year's first quarter rate.

Regionally, the South experienced the highest increase in existing-home sales with rate of 2.99 million units in the first quarter, up 9.5 percent from the first quarter in 2003. After Alabama, the strongest increase in the region was in Florida, where the resale pace was 20.0 percent higher than a year earlier. Tennessee sales activity rose 18.5 percent; seven other Southern states saw double-digit annual increases.

The West posted an annual resale rate of 1.93 million units during the first quarter of 2003, up 9.3 percent compared to the same quarter a year ago. After Nevada and Alaska, the next highest increase in the region was in Wyoming, where existing-home sales rose 23.5 percent from a year ago. Arizona resales were up 19.7 percent, Idaho increased 13.5 percent and California was up 10.6 percent in the same time frame.

In the Northeast, the total existing-home sales pace of 843,000 units in the first quarter rose 4.9 percent from a year ago. The strongest rise in the region was in Maine, where resales rose 14.0 percent from the first quarter of 2003. Connecticut sales activity increased 13.6 percent in the last year, while New Hampshire rose 13.0 percent and Massachusetts was up 11.7 percent.

The Midwest, with a 1.38 million-unit annual sales rate, recorded a 1.5 percent increase in existing-home sales for the first quarter compared with a year earlier. The strongest increase in the region was in Iowa where sales activity rose 16.4 percent from the first quarter of 2003. This was followed by Ohio, where the sales pace rose 10.1 percent, and Illinois, up 4.9 percent from a year earlier.

Source: The National Association of Realtors

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