Home re-sales peak

Real Estate Weekly, Nov 17, 1993

September home re-sale activity bounded to its highest level this year, as low mortgage interest rates and a wide variety of housing choices turned house shoppers into buyers, according to the National Association of Realtors.

The seasonally adjusted annual rate of existing single-family home sales jumped 15.7 percent from a year ago to 3.91 million units. This represented a 2.6 percent increase from the August revised rate of 3.81 million units and was the highest pace recorded since December of last year.

"A growing number of shoppers simply could not resist the temptation to buy last month, and they signed their names on the dotted line. Low interest rates and a positive expectancy about the economy clearly have set the stage for prime home buying conditions, NAR President William S. Chee said.

"We're seeing increased buying activity throughout the housing market, but most impressive is the turnout in the first-time buyer sector," Chee said. "And, that spells good news for those who want to trade up to bigger, more expensive homes, because they now have takers for their current homes. "

The association reported that the general home resale trend this year has been an upward one, with sales in the first nine months of 1993 up 7 percent from the same period last year.

Low mortgage interest rates are an attractive selling point in today's market, Chee said. The Federal Home Loan Mortgage Corp. reported that the national average commitment rate for 30-year, conventional, fixed-rate mortgages dropped to 6.91 percent last month, the lowest level since the late 1960s. this compares with 7.11 percent in August and 7.92 percent in September 1992.

NAR economists prodict mortgage rates will continue a gradual decline throughout this year and next. Existing single-family home sales, in turn, are likely to continue bonefiting from the favorable financing conditions, with a total of 3.68 million home resales expected this year, up nearly 4.5 percent from last year.

Last month's national median existing single-family home price was $107,700, up 4.1 percent from a year earlier, when the price was $103,500. The median is the midpoint in the price range - half the homes sold cost more, half cost less.

"This report is great news for the entire economy," said NAR's Chief Economist, John A. Tuccillo. "Strong housing markets have always had a positive impact on the whole economic picture. In fact, nearly one-fifth of this nation's economic output has its roots in the real estate sector, which means the foundation is there for long-term economic growth," he said.

All regions of the country reported increases in September home resale activity from a year ago and from the previous month, with the exception of the Northeast, which reported no change from August to September. However, the 13.2 percent improvement from September-to-September in that region to a sales pace of 600,000 units, indicates that the Northeast is making obvious progress in its housing market recovery. The median price in the Northeast remained unchanged from a year ago at $137,500.

The Midwest posted a re-sale rate of 1.02 million units in September, up 12.1 percent from the same month a year earlier and up 6.3 percent from the August rate. The median price there was $85,500, up 4.5 percent from a year earlier.

The South recorded an existing-home sales pace of 1.45 million last month, up 16 percent from September 1992 and 2.1 percent from the previous month. The median price in that region was up 4.7 percent from a year ago to $95,900 in September.

The West posted the most impressive annual gain - 20 percent - to a sales pace of 840,000 units in September. This was 2.4 percent above the August rate. The median price there was $144,300, down a scant 0.8 percent.