Home sales rise, defy sagging economic outlook
Tuesday, November 27th 2001, 12:00 am
By: News On 6
WASHINGTON (AP) _ Sales of previously owned homes rose by 5.5 percent in October despite rising unemployment and sagging consumer confidence.
The National Association of Realtors reported Tuesday that existing-home sales increased to a seasonally adjusted annual rate of 5.17 million units last month, the highest level since August.
The rebound came after existing-home sales plunged by 11.6 percent in September as the terror attacks made Americans wary of making big-ticket purchases.
``Three weeks after the Sept. 11 attacks, some of our major brokers were reporting that sales had recovered to 95 percent of pre-attacks levels,'' said David Lereah, the association's chief economist. ``Some of last month's recovery results from transactions that were postponed from September.''
The housing market has been one of the few bright spots in an otherwise gloomy economic picture. The market has remained stable during the more than yearlong economic slowdown, thanks in large part to low mortgage rates.
In October, the average rate for a fixed-rate 30-year mortgage was 6.62 percent, down from 6.82 percent in September, and well below the 7.80 percent posted in October 2000, according to Freddie Mac, the mortgage company.
In early November, 30-year mortgages dipped to 6.45 percent, the lowest level in 30 years of record keeping, Freddie Mac had reported. Since then, rates have edged up and now stand at 6.75 percent.
Analysts say that the lure of low mortgage rates are cushioning the impact of other negative, economic factors. The nation's unemployment rate soared from 4.9 percent in September to 5.4 percent in October. That month, consumer confidence hit a 7 1/2 year low.
Against the backdrop of low mortgage rates, the association predicts that for all of 2001, existing-home sales will total 5.19 milliion, the second highest level on record, and a 1.3 percent increase from 2000.
In an effort to stabilize the ailing economy, the Federal Reserve has cut interest rates 10 times this year, with three of those rate reductions coming after the terror attacks.
By region, home sale rose last month by 10.2 percent in the Northeast to a rate of 650,000. In the Midwest, they went up by 7.3 percent to a rate of 1.17 million and in the South they rose 6.2 percent to a rate of 2.05 million. Sales grew by 1.6 percent in the West to a rate of 1.31 million.
The rise in overall sales in October lifted prices. The median existing-home sales price, meaning half sold for more and half for less, was $145,300, up 4.8 percent from the same month a year ago.