Washington, Jan. 26--Existing-home sales bounced back in December after a two-month slide from September's record pace. In all of 2003, sales sizzled at the highest level on record, fueled by rock-bottom interest rates.
"We've been expecting the pace of home sales to ease, and a decline in November seemed to indicate a more sustainable pace," said David Lereah, NAR's chief economist, "but the rebound in December – the second-highest monthly pace on record – shows there's still a lot of life in this market."
Sales of previously owned single-family homes rose 6.9% to an annual rate of 6.47 million units, from November's revised 6.05 million pace, the National Association of Realtors reported Monday. The annual sales rate fell nearly 10% in October and November combined.
December's rate was the second highest on record, coming in just below the high of 6.68 million homes set in September 2003.
Annual sales in 2003 came in at 6.1 million homes, eclipsing 2002's record pace of 5.56 million. Price appreciation for the year was 7.5%, the strongest pace since the 11.7% posted in 1980.
"Housing continues to boom because interest rates continue at historical lows," Mr. Lereah said.
The housing market has remained strong for the past several years, including throughout the 2001 recession. Although mortgage rates inched up somewhat this summer, they have hovered at historically low levels all year with the average interest rate on 30-year fixed-rate mortgages at 5.88% in December, according to Freddie Mac.
In December, the inventory of existing homes on the market fell 7.3% to a 4.3-month supply, from five months in November. The median home price rose to $173,200 in December, compared with a revised $169,900 in the previous month.
Sales of existing homes were up in all regions, rising 7.9% in the West, 9.4% in the Midwest, 5.3% in the South and 2.9% in the Northeast.
Mr. Lereah predicts that existing-home sales will slow a bit this year, clocking in around 5.8 million units, which would still represent a healthy pace.
