- THE MAGAZINE
NAR's latest report on total existing-home sales showed that nationwide, the seasonally adjusted annual rate (note) was 6.55 million units in the fourth quarter, up 8.6 percent from the 6.03 million-unit level in the fourth quarter of 2001. In addition, fourth-quarter sales were up 5.8 percent from a pace of 6.19 million units recorded in the third quarter of 2002 and were the second-highest level on record.
The strongest annual increase was in Hawaaii, where the fourth quarterresale pace rose 33.9 percent compared with the fourth quarter of 2001. Nevada existing-home sales rose 32.0 percent from a year earlier, while Alabama posted the third highest increase, up 22.3 percent. Eighteen other states also recorded double-digit sales gains from a year ago. Sales declined in only four states.
NAR President Cathy Whatley said both demographics and economics are at play in the strong sales performance. "Obviously, the low level of mortgage interest rates is the dominant factor, along with the fact that most people have good jobs that give them the confidence to go ahead with major purchases," she said. "On top of that is a huge demand created by immigrants and the children of the baby boom generation, which has been entering the prime years for buying a first home."
David Lereah, NAR's chief economist, said there was a great momentum of sales activity moving into the fourth quarter. "To a certain extent, it appears many of the buyers may have been in the market for a while and moved decisively as interest rates dropped to generational lows," he said. "When you look at the corresponding rates of price increase, these are buyers who put their money on the table to get their share of the American dream."
According to Freddie Mac, the average commitment rate on a 30-year conventional fixed-rate mortgage was 6.08 percent in the fourth quarter of 2002, down from 6.29 percent in the third quarter; it was 6.90 percent in the fourth quarter of 2001. Last quarter's average interest rate was the lowest since the Freddie Mac series began in 1971.
Regionally, the West reported the strongest annual increase for the fourth quarter with a resale pace of 1.74 million units, up 14.8 percent from the fourth quarter of 2001. After Hawaii and Nevada, the next highest increase in the region was in New Mexico, where total existing-home sales rose 19.5 percent compared to a year earlier. Utah resales rose 15.6 percent in the same time frame, while Alaska was up 15.5 percent. Five other Western states also posted double-digit sales gains.