Washington, DC, May 14--Low mortgage interest rates and a strong underlying demand for housing drove total state existing-home sales to a new record in the first quarter of 2003. Thirty-four states experienced sales increases in comparison with the first quarter of 2002, according to the National Association of Realtors.
NAR's latest report on sales of previously owned single-family homes, condominiums and co-operatives showed that total sales rose by double-digit rates in 14 states in the first quarter of this year compared to the same quarter in 2002. Fourteen states and the District of Columbia reported generally modest declines in the annual rate of sales activity from a year ago.
Nationwide, the seasonally adjusted annual rate* of total existing home sales reached a record of 6.68 million units in the first quarter, up 2.2 percent from a pace of 6.54 million units in the first quarter of 2002. The previous record was a rate of 6.59 million units in the fourth quarter of 2002; NAR started tracking the total state resale series in 1981.
NAR President Cathy Whatley, owner of Buck & Buck Inc. in Jacksonville, Fla., said the impact of low interest rates can't be underestimated. "Even though we have a strong demand for homes from a growing number of households, a four-decade low in mortgage interest rates is the driving factor in record sales," she said.
According to Freddie Mac, the national average commitment rate for a 30-year conventional fixed-rate mortgage was a record-low 5.84 percent in the first quarter, down from 6.08 percent in the fourth quarter; it was 6.97 percent in the first quarter of 2002. Freddie Mac started tracking mortgage interest rates in 1971.
David Lereah, NAR's chief economist, said a closer examination of states with sales declines shows relative strength. "Most of the states that are down from a year ago have set home-sales records in the last year," he said.
"In addition, some of the states with a sales decline had a shortage of homes available for sale. For example, in the Northeast where regional sales declined, we also saw the strongest price increases – this results from a supply/demand imbalance," Lereah said.
The strongest year-to-year increase was in Nevada, where the first quarter resale pace jumped 28.5 percent compared with the first quarter of 2002. Hawaii rose 28.2 percent from a year ago, while South Dakota posted the third highest increase, up 20.1 percent from last year's first quarter rate.
