Home Sales in U.S. Soar to Record Levels
Sales of existing homes in the U.S. soared in July to a record rate, fueled by low interest rates and consumer confidence, a real estate group said Tuesday.
In a separate report, consumer confidence declined in August, although it held close to a 30-year high.
Nationwide, sales of existing homes hit a seasonally adjusted annual rate of 4.93 million units in July, up 4% from June’s rate and the highest annualized rate on record, surpassing 4.89 million units in March, according to the National Assn. of Realtors.
Existing-home sales in California also broke new records in July, with sales rising 8.1% from the previous month to a seasonally adjusted annualized rate of 677,110, properties, according to the California Assn. of Realtors.
The statewide median price for existing homes reached a new monthly high of $211,780, up 1% from the previous month and 11.1% higher than in July 1997. July’s median sales price--which does not reflect new-home or condominium sales--broke the previous record reached in May 1991, when the median reached $211,000.
“In light of the Asian crisis and its potential impact on the California economy, these sales levels may be difficult to sustain,” said Leslie Appleton-Young, chief economist for the state real estate association. “However, ongoing demand should remain strong enough to support continued price increases.”
The economic crisis that has battered Asia and Russia may have started to hit consumer confidence.
The Conference Board said Tuesday its index of consumer confidence fell to 133.1 in August from a revised 137.2 in July, still close to the 30-year high of 138.2 reached in June.
Lynn Franco, an associate director at the Conference Board, attributed the confidence drop to “disenchantment” caused by turbulent world financial markets and to recent attacks on U.S. embassies in Tanzania and Kenya.
A separate index gauging consumer expectations for the next six months fell to 107.5 this month, the lowest level since October, from 113.4 in July.
The Conference Board said that fewer respondents than last month expect their incomes to rise during the next six months. The indexes measuring plans to buy a home, automobile or major appliance over the next six months all fell.
The strong U.S. economy helped drive sales of existing homes to their third record level in seven months with low inflation and high employment sustaining consumer confidence, said Fred Flick, vice president of economic research at NAR.
“I think when you put all that together, what that tells you is you’re going to have a really good housing market,” he told a news conference.
He noted that July is usually the peak month for the year but predicted the market would continue to remain strong.
Total sales for 1998 should reach 4.7 million units, besting last year’s record total of 4.22 million, Flick said.
The strong sales rate is in part due to an increasing number of households entering the prime buying market, he said. But the market was balanced, he said, with home buyers benefiting from relatively inexpensive financing and sellers profiting from appreciation in the value of their houses.
“I would call it a balanced market--not necessarily a sellers’ market and not necessarily a buyers’ market,” he said.
The median home price, the level at which half of homes sell above and half below, dipped slightly in July to $133,900.
Regionally, the West led the way, with sales rising 13.1% to a rate of 1.12 million. Home sales in the Midwest were also stronger, rising 3.3%.
In the South, sales remained steady at 1.87 million units, while in the Northeast sales climbed 1.5% from the previous month.
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Existing-Home Sales
Seasonally adjusted annual rate, in millions of units:
July: 4.93 million
Source: National Assn. of Realtors
Consumer Confidence
From a monthly survey of 5,000 U.S. households. Index: 1985=100.
Aug.: 133.1
Source: Conference Board
