ICS Magazine

Record year for home sales?

January 2, 2002
The National Association of Realtors says the market for existing single-family home sales rose in November, which in turn set the stage for a possible record year.

WASHINGTON -- The National Association of Realtors (www.nar.realtor.com) reports that the market for existing single-family home sales rose in November, which in turn set the stage for a possible record year.

Existing-home sales increased 0.6 percent to a seasonally adjusted annual rate of 5.21 million units in November from an upwardly revised pace of 5.18 million units in October. December's sales activity was 1.7 percent below the 5.30-million unit pace in November 2000.

NAR chief economist Dr. David Lereah said this is a positive development. He said, "Existing-home sales have been consistently stronger than expected this year, and we're so close to setting a new record that we really won't know until the December data is available. What's more, we're looking for another strong performance in 200."

Despite the recession, which began in March, all the major factors necessary for a strong housing market -- low interest rates, strong household formation and relatively low unemployment -- are continuing. According to Lereah, this in turn creates "favorable market conditions."

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.66 percent in November, up slightly from a record-low 6.62 percent in October; it was 7.75 percent in November 2000. Freddie Mac began tracking commitment rates in 1971.

Housing inventory levels at the end of November rose 6.7 percent from October to a total of 2.08 million existing homes available for sale, which represents a 4.8-month supply at the current sales pace; there were 1.95 million homes available at the end of October, which was a 4.5-month supply. The November inventory level is 11.8 percent higher than November 2000, when 1.86 million homes were on the market, representing a 4.2-month supply.

The national median existing-home price was $147,300 in November, up 5.6 percent from November 2000 when the median price was $139,500. The median is the midpoint, which is a typical market price where half of the homes sold for more and half sold for less.