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

To: John Chen who wrote (7615)	12/27/2002 12:57:35 PM
From: calgal	Read Replies (1) \| Respond to of 306849

Posted 12/27/2002 10:12 AM Updated 12/27/2002 10:40 AM 5.7% jump in new-home sales sets a monthly record URL:http://www.usatoday.com/money/economy/housing/2002-12-27-new-homes_x.htm WASHINGTON (AP) — New-home sales jumped 5.7% in November to the highest monthly level on record as house hunters — motivated by some of the lowest mortgage rates seen in decades — turned into home buyers. New-home sales jumped 5.7% in November to the highest monthly level on record as house hunters — motivated by some of the lowest mortgage rates in decades — turned into home buyers. The Commerce Department reported Friday that sales of new single-family homes climbed to a seasonally adjusted annual rate of 1.07 million in November, a 5.7% increase from October. November's performance surprised analysts who were forecasting sales to fall. New-home sales dropped 4% in October to a seasonally adjusted rate of 1.01 million, but even with the decline, sales were at a brisk level. The housing market is one of the bright spots of this year's uneven economic recovery, due largely to low mortgage rates. In November, the average interest rate on a 30-year fixed-rate mortgage was 6.07%, down from 6.66% the same month a year ago. This week, rates on 30-year mortgages dropped to a new low, 5.93%, according to Freddie Mac, the mortgage giant. Low mortgage rates this year have fed a flurry of home mortgage refinancing. The extra monthly cash consumers are saving by refinancing their mortgages at lower interest rates is helping support consumer spending, which has been the main force keeping the economy going this year. "Applications for refinancing, while off their peaks, remain high," Federal Reserve Chairman Alan Greenspan said in a speech last week. "Moreover, simply processing the backlog of earlier applications will take some time, and this factor alone suggests continued significant refinancing originations and cash-outs into the early months of 2003," he said. Another factor motivating home buyers: Solid appreciation in housing values. That offers people an attractive investment, especially given the turbulent stock market, economists say. All these positive factors supporting consumer spending are helping offset some negative ones, including a stagnant job market. Keeping a close eye on the economic recovery, the Federal Reserve earlier this month decided to hold a key interest rate steady at a 41-year low of 1.25%. Economists believe the Fed will keep rates at that level at its next meeting in late January. By keeping rates low, Fed policy-makers hope to keep consumers spending and induce businesses to boost investment, forces that would help economic growth. By region, new-home sales surged 41.2% in November from the previous month to a seasonally adjusted rate of 257,000 in the Midwest. In the South, sales rose 2.4% to a pace of 475,000. But in the Northeast, sales plunged 26.7% to a rate of 44,000 and in the West they dipped 3.9% to a pace of 293,000. The average price of a new home in November was $218,900, a 5.8% increase from the average price at this time last year. But November's average home price was down from the previous month. November's average new-home price of $218,900 marked a 2.9% decline from October's average of $225,500. The economy — knocked down by last year's recession — has been slowly getting back on its feet. But economic growth has been characterized by a seesaw pattern. While consumers have been keeping the economy alive, businesses — worried about profits and economic uncertainties, including a war with Iraq — have been reluctant to make big investments, a key factor restraining the recovery. Copyright 2002 The Associated Press. All rights reserved. T