March Existing-Home Sales at New High

Sales of existing homes rose to a record high in March, spurred by low interest rates and strong income growth and a surging stock market, the National Assn. of Realtors said Monday.

Americans’ incomes surged at more than double the inflation rate last year, the Commerce Department said in a separate report Monday. Nationally, average income for America’s 267.6 million men, women and children totaled $25,598, up 4.8% from 1996, it said.

In another sign of economic strength, the National Assn. of Business Economists said that more than 60% of corporate economists are planning for “average growth,” with the economy expanding 2.5% to 3% this year.

The U.S. economy will likely grow at a moderate pace in 1998 as consumer demand and employment growth remain strong and inflation stays tame, the NABE said in its latest quarterly survey of 107 corporate economists.

Existing-home sales climbed 2.5% to a seasonally adjusted annual rate of 4.89 million units, up from 4.77 million units in February, NAR said.

Based on the first three months of 1998, Realtors President R. Layne Morrill predicted sales for the full year would surpass last year’s record of 4.22 million, rising 3.2% to 4.35 million.

In California, the pace of existing, single-family home sales in March rose 14.8% from last year to a seasonally adjusted annual rate of 601,140 properties, the California Assn. of Realtors. said.

The increase in California came despite weakness in the West--the only region to show a decline in sales, to 1.03 million units sold in March from a level of 1.04 million units in February.

Home values also posted strong gains, with the statewide median sales price in March rising 10.5% from the same period last year to $196,400.

The median sales price in Orange County in March rose 12.3% to $246,390, and the San Francisco Bay Area median price increased 13.1% to $312,300.

Los Angeles County reported a 5.8% year-over-year increase to $180,600. The sales and price statistics exclude condominiums and new homes.

Nationally, the median sales price rose to $127,000 from $124,500 in February.

The recent trend in home resales has been fueled by a combination of a strong economy, firm employment and the large number of Americans in their 40s buying new homes, NAR consulting economist John Tuccillo said.

The annual sales rate should drop a little by the end of the year, but 1998 should see a record 4.35 million units sold, eclipsing the 4.22 million unit rate achieved in 1997, NAR said.

The NABE survey, conducted in late March and early April, found that 27% of the economists said they expect “sluggish growth” of about 1.5%, while 12% see “strong growth” in 1998, at a 3.5% pace.

Forty percent of the economists surveyed said prices this year would be unchanged from 1997, while 27% said they plan to raise prices less than 2%, and 23% planned larger price increases next year. And 10% said they would cut prices in 1998.

The Commerce Department report showed that per capita income growth last year wasn’t much better than the 4.6% increase in 1996. But after factoring in the declining inflation rate, per capita income growth jumped 2.2% in 1996 and 2.8% in 1997.

Associated Press and Reuters were used in compiling this report.

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Existing-Homes Sales

Seasonally adjusted annual rate, in millions of dollars:

March: 4.89

Source: National Assn. of Realtors