Highest in 7 Years : Existing Home Sales Surge 2.9%

Sales of existing homes climbed to their highest level in seven years last month as a rebound in economically depressed Southern states overcame weakness in other areas of the country, a real estate trade group reported Monday.

In Western states, sales fell 4.2% last month to 680,000 units, but that was still 13.3% ahead of the pace in November, 1985.

The National Assn. of Realtors said total sales of existing single-family homes rose 2.9% in November to a seasonally adjusted annual rate of 3.92 million units.

The November increase marked the fifth consecutive month that sales of existing homes have risen. By contrast, sales of new homes have declined during the same period.

Some analysts speculated that a faster increase in new-home prices may be partly to blame for the disparity.

However, prices of existing homes rose as well in November, the first increase in three months. The 1.9% increase put the median price of an existing home at $80,900. The median price means that half the homes sold for more and half for less.

Homes in the West were selling for a median price of $102,400 in November, 8% ahead of a year ago.

The increase in sales last month followed a 1.1% rise in October and put the sales pace 13.6% ahead of where it was a year ago. The annual sales rate was the highest since September, 1979, when houses were sold at an annual rate of 3.94 million units.

Mostly in South

The November sales improvement was concentrated primarily in the South, where sales rose 13.3% to an annual rate of 1.53 million units after a 2.2% October decline.

The South has been hard hit by depressed conditions in the region’s oil and gas industry and in farming. Analysts suggested that the November improvement may have come from speculators buying real estate at depressed prices.

“It appears that investors in some of these markets are buying houses with the belief that these economies are going to improve soon and cause home values to rise,” said William M. Moore of Denver, president of the realtors association.

Moore said sales are also being propeled by consumers seeking to buy now before home price increases overshadow savings brought about by falling mortgage rates.

Fixed-rate mortgages averaged 9.3% last week, the lowest level of this decade, according to a survey by the Federal Home Loan Mortgage Corp. Analysts have speculated that the average will drop below 9% in the early part of next year.