WASHINGTON, Sept. 25 /PRNewswire/ -- Existing single-family home sales declined in August from the previous month's
record pace, but remained at an exceptionally strong level, according to the National Association of Realtors.
The seasonally adjusted annual rate of existing single-family home sales was 4.73 million units in August, down 3.7 percent from
the all-time high resale rate of 4.91 million units reported in July. The August pace was 10.5 percent above the 4.28 million
units recorded in August 1997.
NAR President R. Layne Morrill noted that despite the slide in August sales, the rate is still well above what is considered to be
the economic threshold: a sustained rate of 3.5 million units. ''The dip in numbers reflects a cautious correction in the market as
consumers stopped to catch their breath in a very healthy economy,'' he explained. ''In fact, the sharp changes in the financial
markets a few weeks ago only served to underscore the stability of residential real estate as a safe, solid long-term investment
choice for consumers,'' Morrill added.
He noted that the true return on a home investment should be based on home appreciation and the amount leveraged. Home
buyers typically use their own money to cover only 10 to 20 percent of the purchase price of a home, yet the home
appreciation they realize is based on the total value. ''Add this to the tax benefits home buyers receive for their investments, in
the form of deductions allowed for mortgage interest and property taxes, and this leveraging of borrowed funds gives housing a
return far in excess of the market's appreciation,'' Morrill said.
The national median existing-home price for August was $132,900, an increase of 4.2 percent from August 1997, when the
price was $127,500. The median is the midpoint -- half the homes sell for less, while half sell for more.
Freddie Mac reported that the national average commitment rate for a 30- year, conventional fixed-rate mortgage was 6.92
percent in August, compared to 6.95 percent in July and 7.48 percent in August 1997.
NAR Consulting Economist John A. Tuccillo said home sales are expected to continue their historically high levels throughout
the remainder of 1998, and noted that the association is predicting a total of 4.70 million existing-home sales for 1998,
compared to last year's record of 4.21 million sales. Currently, NAR is projecting the existing-home sales total to stay above
4.0 million units through the year 2000.
Tuccillo explained that the fluctuations in the stock market earlier this month should have a positive impact on the real estate
market. ''The recent waves in the foreign markets have resulted in many investors putting their money into U.S. Treasury bills,
which has pushed bond yields to extremely low levels. Since 30-year mortgage rates generally track the movement of long-
term bonds, rates will likely fall further from already low levels, making home financing even more affordable,'' he said.
The resale pace in the South was recorded at 1.85 million units, a decline of 3.8 percent from July. However, resales were up
14.2 percent from the rate posted in the South a year ago. The median price was $119,700, an increase of 5.9 percent from
August 1997.
The Northeast experienced a July-to-August decline of 1.5 percent. The resale rate for August stood at 670,000 units,
compared to 680,000 units in July, but up 8.1 percent from a year ago. The median price reported for the Northeast was
$153,000, up 3.2 percent from the same month a year ago.
The Midwest recorded a pace of 1.18 million units in August, down 5.6 percent from July; however, sales were 9.3 percent
higher than a year ago. The median resale price for the Midwest was $116,000, up 5.6 percent from August 1997.
The West reported a rate of 1.03 million units, down 6.4 percent from July, but up 6.2 percent from August 1997. The median
resale price was $171,700, up 5.1 percent from a year ago.
At the end of August, there were 1.97 million existing homes available for sale, which represents a 5.0-month supply at the
August sales pace.
The National Association of Realtors, ''The Voice for Real Estate,'' is the nation's largest professional association representing
nearly 720,000 members involved in all aspects of the real estate industry.
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