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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: LLCF who wrote (14106)	1/28/2002 3:23:07 PM
From: AC Flyer	Read Replies (2) \| Respond to of 74559

The residential real estate downturn continues - NOT! "Reuters Finance News New Home Sales Rise, Set Record for Year Jan 28 12:17pm ET By Mark Felsenthal WASHINGTON (Reuters) - Sales of new U.S. homes rose 5.7 percent in December and set a record for the year, the government said on Monday, as the housing sector registered a stunning performance despite the U.S. economic recession. "It's the one resilient part of the economy, the one that has continued to impress throughout this recession," said Fred Breimyer, chief economist for State Street Corp. New homes were sold at a seasonally adjusted annual rate of 946,000 last month, up from a revised 895,000 pace in November, the Commerce Department said. December home sales were ahead of the expectations of analysts polled by Reuters, who had forecast a sales pace of 925,000 units. The sales level for the entire year was 900,000 units, 2.6 percent above the 877,000 volume for 2000. The annual figure is the highest since the government began keeping track in 1963, and exceeds the 1998 high of 886,000. Sales of existing homes also set a record for 2001, with a volume of 5.251 million units, the National Association of Realtors said last week. In terms of region, last month sales of new homes soared 35.1 percent in the West, but fell in all other parts of the country, dropping 9.6 percent in the Midwest, 1.4 percent in the Northeast, and 1.1 percent in the South. Economists discounted the surge in the West, saying warm weather may have boosted construction. Housing activity has remained strong throughout the U.S. economic downturn due to low interest rates and lean inventories. In one of the most aggressive rate-cutting sprees in history, the Federal Reserve cut short term rates 11 times last year to boost the flagging economy. Meanwhile the average price for a new home rose to $225,400 in December, a record. The popular 30-year fixed-rate mortgage fell as low as 6.45 percent in early November, but rose to over 7 percent in December, according to home finance giant Freddie Mac. It stood at 6.96 percent in the week ended Jan. 25, Freddie Mac said. "It's been a very unusual downturn -- all consumer-related areas have held up well including housing, and housing has gotten the additional boost from the rate environment," said Jan Hatzius, an economist for Goldman Sachs. But analysts said the strong performance of residential real estate in 2001 may mean it will not contribute to an eventual U.S. economic recovery. "I'd be somewhat sympathetic to the view that housing has nowhere to go," said Breimyer."