Tuesday, November 23, 2004

Real estate sales, prices stagnate in October

West, Northeast regions see highest price gains since October 2003


Inman News

Existing, single-family homes edged down from September to October, while the national median price increased only slightly, the National Association of Realtors reported today.

Existing-home sales slid 0.1 percent in October, reaching a seasonally adjusted annual rate of 6.75 million units, but was up 5.6 percent from a 6.39-million-unit pace in October 2003. The seasonally adjusted annual rate projects a monthly total over a 12-month period.

Meanwhile, the median existing-home price was $187,000 in October, up 0.2 percent from $186,600 in September and up 8.8 percent from $171,800 in October 2003.

David Lereah, chief economist for the association, said home sales continue to exceed expectations. "The ongoing stimulus of lower-than-expected mortgage interest rates was the primary driver of strong home sales in October," he said. "Of course all of the other market fundamentals remain sound, so we should only see a modest decline from record home sales this year if mortgage interest rates gradually rise."

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.72 percent in October, down from 5.75 percent in September; the rate was 5.95 percent in October 2003.

Al Mansell, association president and CEO of Coldwell Banker Residential Brokerage in Salt Lake City, said, "With a growing population, an improving economy and generally favorable housing affordability conditions, there is no end in sight to the current housing expansion," he said. "Although sales are likely to ease from record levels, they'll remain at a high threshold in years to come and continue to supply long-term gains."

Housing inventory at the end of October improved slightly, rising 0.4 percent from September to a total of 2.4 million existing homes available for sale, which represents a 4.3-month supply at the current sales pace, the association reported.

Regionally, the existing-home sales pace in the South rose 3.7 percent in October to an annual rate of 2.77 million units and was 7.7 percent above a year earlier. The median price of an existing home in the South was $169,200, which was 7.9 percent higher than October 2003.

Existing-home sales in the Northeast slipped 1.3 percent in October to a pace of 750,000 units, but were 1.4 percent above October 2003. The median existing-home price in the Northeast was $226,100, up 14.7 percent from a year ago.

In the Midwest, homes were reselling at an annual rate of 1.37 million units in October, down 2.8 percent from September, but were 0.7 percent above a year ago. The median price in the Midwest was $152,100, up 8.4 percent from October 2003.

Home resale activity in the West declined 3.6 percent from September to an annual rate of 1.86 million units in October, but was 9.4 percent above October 2003. The median existing-home price in the West was $272,300, up 14.4 percent from a year ago.

Existing-home sales, which are based on transaction closings, differ from the U.S. Census Bureau's series on new-home sales, which are based on contracts or the acceptance of a deposit. In the count of new-home sales, a house can be in any stage of construction ranging from not started to fully complete. The count of existing-home sales is based on completed transactions in which the home usually is ready for occupancy. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 percent of total home sales, are based on a much larger sample and typically are not subject to large prior-month revisions that are fairly common in the new-home sales series, the association reported.

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