WSJ: 6/27/00 Home Sales Rebound in May Ahead of Possible Rate Rise.
And the heat is on....., the heat is on...
TA
-------------------------------------------------------
June 27, 2000
--------------------------------------------------------------------------------
Home Sales Rebound in May
Ahead of Possible Rate Rise
By PATRICK BARTA
Staff Reporter of THE WALL STREET JOURNAL
interactive.wsj.com
WASHINGTON -- Home sales bounced back in May as buyers rushed to lock in
favorable financing before interest rates rise any further.
According to the latest report of the National Association of Realtors, sales of
previously occupied, or existing, homes rose 4.3% in May to a seasonally adjusted
annual rate of 5.09 million units, up from a pace of 4.88 million units in April.
Last month's sales rate was 1% higher than the rate of 5.04 million units in May 1999.
The results caught many economists by surprise, since they were expecting
the market to cool as a result of rising interest rates this year. Fears of inflation helped
drive rates for an average 30-year fixed-rate mortgage to 8.64% last month, the highest
level in five years, and in April, home sales dropped 6.2% from a pace of 5.2 million units in March.
But now, all signs point to a booming market.
If sales continue at their current pace, they will finish the year 2% shy of last year's total of 5.197 million homes,
the most ever sold in a single year. Applications for new mortgages have been rising steadily all year to near
an all-time high, and they already are higher than they were a year ago, says David Berson, chief economist at Fannie Mae.
"The implication is that the underlying demand for homes appears to be quite strong
and doesn't appear to have fallen meaningfully, if at all, with the rise in mortgage rates," he says.
Indeed, "it's very possible that we could have a stronger market this year than we've been projecting,"
adds Fred Flick, an economist at the National Association of Realtors.
Last month's increase was aided by an uptick in the supply of available homes.
Earlier in the year, the supply of homes reached an all-time low, meaning many
buyers couldn't find a suitable house. Since March, the supply picture has improved, luring more buyers to the market.
interactive.wsj.com
Though the inventory of homes dropped in May to 1.52 million units -- or about a 3.6-month supply
at the current sales rate -- from April's 1.54 million units, the current supply is much better than
in the beginning of the year. In January, the supply of homes hit a record low of 940,000 units, or a 2.6 month supply at the time.
Economists and realtors say a lot of people have been rushing to buy because they
are afraid mortgage rates could rise.
Moreover, mortgage rates have eased down in the past month, which could fuel even more buying.
According to Freddie Mac, the rate for a 30-year fixed-rate
The national median existing-home price was $137,200 in May, up 3.3% from $132,800 a year ago.
The median is the midpoint -- half the homes sell for less, while half sell for more.
May's average price of $176,600 was 5.5% higher than the average of $167,400 a year ago.
Regionally, the strongest sales increase was in the Midwest, where homes were selling
at an annual rate of 1.15 million units in May, up 7.5% from April; that pace was 2.7% above
May 1999. The median resale price in the Midwest was $119,700, up 1.7% from a year ago.
Sales in the West rose 3.9% from April to May, at an annual rate of 1.34 million units,
1.5% higher than May 1999. The median resale price in the West was $181,200, up 4.6% from the same month in 1999.
Sales in the South rose 3.6% in May, at an annual rate of 1.99 million units, 0.5% higher
than a year ago. The median price of an existing home in the South was $126,900, which was 5.6% above a year ago.
Northeast sales rose 1.7% from April to a resale rate of 610,000 units in May; that rate was
1.6% below May 1999. The median existing-home price in the Northeast was $144,700, up 2% from a year ago. |
