March Home Sales Defy Expectations |
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Existing home sales jumped more than expected last month, while the median price soared 11.4% from March 2004 -- the biggest year-over-year leap since 1980, a trade group said Monday in a report that belied predictions of a slowing market. The National Association of Realtors said sales of existing homes, town houses, condominiums and co-ops, which account for about 85% of all home sales, rose 1% to a seasonally adjusted annual rate of 6.89 million in March. That's the third-highest sales figure on record, well above economists' predictions for an essentially flat sales month. The median U.S. existing home price rose to $195,000, in the third-consecutive month of double-digit price gains. The median price for an existing home rose 18.9%, year-over-year, in the West to $289,000; 14.7% in the Northeast to $242,000; 11.2% in the Midwest to $159,000; and 7% in the South to $169,000. Volume rose in all regions except the Northeast. Economists for months have been expecting the housing market to slow from 2004's record pace. But in recent weeks, sales have heated up, buoyed by a generally strong economy and mortgage rates that remain below 6% for a 30-year fixed loan. Changing demographics, including higher immigration and the increased economic clout of baby boomers, are also underpinning the market. Economists warn markets are becoming seriously out of whack in some areas of the country, particularly on the East and West coasts. Federal Reserve Governor Don Kohn in a speech last week called housing prices "lofty," though expecting them to slowly correct rather than crash. In a separate report Monday, the Census Bureau said Hispanic homeownership hit a peak of 49.7% in the first quarter of 2005. Overall homeownership stayed about constant at 69.1%, while African-American homeownership was 48.8%, compared with 49.1% in the fourth quarter of 2004. The Realtors said the supply of homes for sale fell a bit in March, though inventory is higher than at the end of 2004. "We'd really like to see a bigger supply of homes so people don't feel pressured," says Al Mansell, CEO of Coldwell Banker Residential Brokerage in Salt Lake City and president of the Realtors group. Ian Shepherdson, chief economist at High Frequency Economics, says mortgage application data suggest sales could remain near the March level until interest rates rise significantly and stay high. Prices should continue to rise, "though we doubt the rate of increase can climb any further," Shepherdson said. "The trend in sales remains remarkably steady at a very high level, though no further upward movement is likely," Shepherdson said. The existing home sales data follow last week's report that new home construction dropped 17.6% in March, though some of the decline could reflect weather. Economists will be closely watching today's report on new home sales for further clues as to the health of the market. | ||||||
| Last Updated ( Wednesday, 29 April 2009 ) | ||||||
