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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: MSI who wrote (4707)	8/27/2002 12:31:46 AM
From: calgal	Respond to of 306849

08/26/2002 - Updated 03:22 PM ET Home sales jump in July By Thomas A. Fogarty, USA TODAY The nation's housing market continued to hum sweetly in July, lubricated by the lowest mortgage interest rates in 35 years. New homes last month sold at an annualized rate of 1.017 million, the government reported Monday. That's up 6.7% from a revised June rate, and a record monthly high. Separately, the National Association of Realtors reported existing homes sold in July at an annualized rate of 5.33 million. The sales midpoint in July was $162,800, up 7.3% from a July 2001. The existing homes sales rate is up 4.5% from June but remains below the torrid pace for the first five months of 2002. Still, the July sales rate roughly matches the record 5.3 million home resales recorded in 2002. "This is not the start of a housing slump," says Ian Shepherdson of High Frequency Economics. The slightly slower pace of home resales in June and July is probably the result of tight supplies of homes on the market, he says. The new reports extend for another month a winning streak for the nation's housing market that began in 1996 and has barely let up. Its strength has surprised experts coming as it does amid sluggishness in the broader economy. Underlying the July numbers are the lowest mortgage interest rates since 1967, says David Lereah, NAR's chief economist. According to mortgage investment giant Freddie Mac, 30-year fixed rates averaged 6.49% last month, vs. 7.13% in July 2001. The differential would cut $85 from the monthly payment on a $200,000 mortgage. The combination of an underperforming economy and a down stock market provide benefits to housing, experts say. It helps in two ways: Americans increasingly are seeing houses as a safer place than stocks for investing. That boosts demand for homes, which in turn lifts sales volume and prices. Investors around the world have endured heavy losses in their equity portfolios and are seeking the safety of the U.S. bond market. That means capital for home financing is cheap and plentiful, and borrowers' interest rates stay low. Persistent sluggishness in the broader economy makes many experts think mortgage interest rates will stay low for some time. The Federal Reserve appears to be months away from raising short-term interest rates, an action that would indirectly result in higher mortgage rates. Celia Chen, housing economist at Economy.com, says a spike in 30-year interest rates to 7%-plus would bring the good times for housing to an end. "More likely than a dramatic reversal," she says, "is a moderate easing in the housing market brought on by slowly rising mortgage rates combined with a firming economy." Even then, she says, an improving economy could benefit housing by boosting personal income and bolstering consumer confidence. usatoday.com