Home sales slow in wake of terrorism after setting record in August
Tuesday, September 25th 2001, 12:00 am
By: News On 6
WASHINGTON (AP) _ Sales of previously owned homes jumped to a record level in August, but have slowed in the wake of the terrorist attacks two weeks ago.
The National Association of Realtors reported Tuesday that existing-home sales rose by 5.8 percent from the previous month to a seasonally adjusted annual rate of 5.50 million in August, an all-time monthly high. The previous record of 5.45 million was set in June 1999 when the economy was booming.
Americans' solid demand for homes has helped support the sagging economy, which has been stuck in low gear since the second half of last year.
``Like everything else, this bright spot in the American economy has been eclipsed by the events of Sept. 11,'' said David Lereah, the association's chief economist. ``Our internal tracking shows a downturn following the attack on America, and there will be some natural pullback from big-ticket purchases in the months ahead give uncertainty over the future,'' he added.
For all of 2001, Lereah forecast existing-home sales to clock in at 5.19 million, a 1.3 percent increase from the level in 2000.
In an effort to try to stabilize the teetering economy, the Federal Reserve has slashed interest rates eight times this year, with the most recent one of a half-point, coming last week. The Fed's action has pushed borrowing costs down to a nine-year low.
Still, the National Association of Realtors joined other groups and economists, who in the aftermath of the Sept. 11 attacks, changed forecasts to suggest that a recession in nearly unavoidable.
The association now forecasts the economy will contract by 0.6 percent in the current quarter and by 0.2 percent in the fourth quarter. But it predicts recovery next year, forecasting a 3.4 percent growth rate by the second quarter of 2002.
By region, sales rose by 9.8 percent in the West to an annual rate of 1.46 million and they were up by 6.2 percent in the Northeast to a pace of 690,000. In the South, sales grew by 5.3 percent to a rate of 2.18 million and in the Midwest, they increased 2.6 percent to a rate of 1.17 million
The rise in overall sales in August lifted prices. The median existing-home sales price, meaning half sold for more and half for less, rose 8 percent to $154,700 in August from the same month a year ago.