Existing Home Sales Up in November

WASHINGTON (AP) â€” Cheaper mortgage rates encouraged Americans to snap up existing homes in November, pushing sales to the highest level in three months. <br><br>The National Association of Realtors reported

Thursday, December 28th 2000, 12:00 am

By: News On 6

WASHINGTON (AP) â€” Cheaper mortgage rates encouraged Americans to snap up existing homes in November, pushing sales to the highest level in three months.

The National Association of Realtors reported Thursday that sales of previously occupied homes rose by 4.4 percent last month to a seasonally adjusted annual rate of 5.22 million. That was the highest level since a rate of 5.28 million in August.

``Mortgage interest rates have dropped three-quarters of a percentage point since peaking in May, which is keeping sales strong in the closing months of the year,'' said David Lereah, the association's chief economist.

Mortgage rates have fallen since hitting a five-year high of 8.64 percent in May. The average rate on a 30-year fixed-rate mortgage in November was 7.75 percent, down from 7.80 percent in October. Last week, rates fell to a 19-month low of 7.17 percent.

The Federal Reserve's six short-term interest rate boosts between June 1999 and May of this year helped to push up mortgage rates earlier in the year. But as the economy has slowed, long-term mortgage rates have eased.

With the Fed declaring an end to its string of interest-rate increases and shifting its focus away from fighting inflation to guarding against a sluggish economy, the central bank is now positioned to cut short-term rates. Many analysts expect a rate cut in January.

The interest-rate-sensitive housing sector has been an engine of the economy. The real-estate group expects existing-home sales of 5.01 million for all of 2000, which would make it the second-strongest year on record. In 1999, existing-home sales hit an all-time high of 5.2 million.

November's increase came after sales fell by 3.1 percent in October.

Despite a decline in consumer confidence in the nation's economy and stock market volatility, sales were up in all regions of the country in November except for the South, where they fell.

In the Northeast, sales rose 10 percent to a seasonally adjusted annual rate of 660,000. In the Midwest, they increased by 8.4 percent to a rate of 1.16 million and in the West they went up by 6 percent to a rate of 1.41 million. But in the South, sales slipped 0.5 percent to a rate of 1.99 million.

The boost in sales also lifted home prices.

The median existing-home sales price, meaning half sold for more and half for less, was $139,900 in November, up 5.0 percent from the median price for the same month a year ago.

The inventory of homes available for sale is extremely tight, analysts said. The number of homes available to sell plummeted 13.4 percent to 1.55 million, representing a 3.6-month supply at the current sales pace.

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On the Net:

Existing-home sales report: http://nar.realtor.com/