Washington, DC, Jan. 27--Sales of existing single family homes rose in December while 2002 set a new annual record, according to the National Association of Realtors.
There were a total of 5,563,000 existing home sales in 2002, up 5.0% from the previous record of 5,296,000 in 2001. The NAR began tracking the sales series in 1968.
Existing home sales increased 5.2% in December to a seasonally adjusted annual rate of 5.86 million units from an upwardly revised level of 5.57 million units in November.
Last month's sales activity was 12.7% higher than the 5.20 million unit level in the same period a year ago and was the third strongest monthly sales pace on record.
David Lereah, NAR's chief economist, said a combination of favorable market conditions has been contributing to record housing activity. "Exceptionally low mortgage interest rates are the primary factor in record levels of home sales," he said. "Interest rates are the lowest they've ever been in Freddie Mac's records, and looking at other sources we have to go back to 1965 to see similar mortgage rates."
According to Freddie Mac, the national average commitment rate for a 30 year, conventional, fixed rate mortgage was a record low 6.05% in December, down from 6.09% in November; it was 7.07% in the same period a year ago. The average 30 year rate for all of 2002 was 6.95%, the lowest annual average since Freddie Mac started tracking interest rates in 1971.
"Strong demand by first time home buyers, fueled by the children of the baby boom generation and by immigration, along with a generally good job market and growing families trading up to larger homes, also has been contributing to record home sales activity," Lereah said.
NAR president Cathy Whatley said the momentum of home sales is expected to remain strong. "With favorable affordability conditions and an improving economy, home sales are projected to remain strong in 2003 and should come fairly close to record levels, but it's unlikely they'll top last year's record smashing performance," she said.
"Because the overall economy is expected to improve this year, mortgage interest rates should rise modestly," Whatley said. "For the near term, this means we have the most favorable housing affordability conditions that can be expected all year. The only problem is a localized shortage of homes available for sale in many of the markets that have had a tight supply over the last year."
Housing inventory levels fell 10.8% at the end of December with 2.06 million existing homes available for sale, which represents a 4.2 month supply at the current sales pace, down from a 5.0 month supply in November.
The national median existing home price was $164,000 in December, up 7.1% from December 2001 when the median price was $153,100. For all of 2002, the median price was $158,300, up 7.1% from a median of $147,800 in 2001. This is the strongest annual increase since 1980 when the median price rose 11.7%
Regionally, homes in the Midwest were reselling at an annual rate of 1.36 million units in December, up 12.4% from November; they also were 12.4% above December 2001. The median price in the Midwest was $137,300, up 4.6% from a year ago.
Existing home sales in the South rose 4.6% in December to an annual rate of 2.29 million units, and were 11.7% higher than December 2001. The median price of an existing home in the South was $155,200, which was 6.7% higher than December 2001.
The home resale pace in the West rose 2.0% from November to an annual rate of 1.56 million units in December; the pace was 17.3% stronger than December 2001. The median existing home price in the West was $215,200, up 11.3% from the same month a year earlier.
