Washington, DC, Nov. 25--Sales of previously owned homes registered their third best month on record in October and are on track for an all time high this year. According to the National Association of Realtors, existing home sales climbed to a seasonally adjusted annual rate of 5.77 million in October, representing a 6.1% jump from the previous month.
October's performance, which followed a 2.6% advance in sales in September, exceeded analysts' expectations. They were forecasting a small dip in last month's sales.
³With mortgage rates dropping to more than 30 year lows, people are viewing this as a home buying bonanza,² said Stuart Hoffman, chief economist at PNC Financial Services Group. ³This makes the housing market one of the brightest spots in an otherwise dull economy.²
October's brisk 5.77 million sales pace tied with April's as the third highest monthly level on record. Existing home sales for all of 2002 are expected to shatter the record set last year.
Home sales are being stoked by low mortgage rates. The average rate on a fixed rate 30 year mortgage was 6.11% in October, up slightly from a record monthly low rate of 6.09% in September, but well below the 6.62% average rate seen in October 2001.
The small creep up in mortgage rates in October probably prompted some people, worried that mortgage rates might continue upward, to jump off the fence and lock in a deal, said David Lereah, chief economist for the National Association of Realtors.
Last week, rates on 30 year mortgages stood at 6.03%, up slightly from the previous week's 5.94%, which marked the seventh new weekly low this year for the benchmark mortgage.
The national median price of an existing home rose to $159,600 in October, a 9.8% increase from the same period a year ago. That marked the largest increase since July 1987.
³The rise in housing wealth implied by these higher home prices will continue to help offset earlier losses of stock market wealth and enhance household spending power in a period of limited hiring,² said Maury Harris, chief economist at UBS Warburg.
By region, sales of existing rose in the Northeast homes to a rate of 680,000, a 7.9% increase in October from the previous month. In the West, sales went up 7.1% to a rate of 1.50 million, and in the South sales rose 5.5% to a rate of 2.31 million. For the Midwest, sales rose to a rate of 1.27 million, a 4.1% increase in October from September.
