Home Sales Hit a Record in January
Sales of existing homes rocketed to record levels in January as optimistic consumers, low borrowing costs and low unemployment continued to fuel demand in the housing industry, economists said Wednesday.
Sales last month rose 0.7% to an annualized rate of 4.4 million, the National Assn. of Realtors reported. It was the highest monthly annualized rate on record since the association began collecting sales data in 1968.
The group also said the December sales rate was revised upward to 4.37 million units, annualized, from 4.29 million.
The association said sales of existing homes are likely to top 4 million units in 1998 and could match or top 1997’s record of 4.21 million.
In California, home sales remained strong in January despite minor slowing from December’s robust pace, according to the California Assn. of Realtors. The seasonally adjusted annualized rate of single-family home sales last month totaled 568,920 properties. That was down 1.9% from December but up 10.6% from a year ago.
Home values in the state also rose in January, with the median sales price climbing 9.2% from the same month last year to $191,780. That was 0.9% higher than in December.
Nationwide, the median price of an existing home was $126,100 in January, up 4.6% from a year ago.
“We have never seen home sales this strong,” said Russ Sheldon, chief economist at MCM MoneyWatch Inc., who correctly predicted that the January annual sales rate would climb to 4.4 million units.
“This number represents the impact of strong consumer confidence and moderate mortgage rates,” said NationsBank Corp. economist Lynn Reaser. She also said demand for housing is being buttressed by rising real incomes.
Paul Kasriel, chief U.S. economist at Northern Trust Corp., agreed.
“Mortgage rates are low and unemployment is low and real incomes are rising,” he said. “That is the perfect recipe for a strong housing market.”
The national Realtors group reported that 30-year mortgage rates in January fell slightly from December. Citing Freddie Mac data, it said the rates averaged 6.99%, off from 7.10% in December. A year ago, the 30-year rate was 7.82%.
The financial crisis in Asia has helped keep U.S. interest rates low, making it easier for Americans to buy homes, the Realtors group said.
Market observers said low mortgage rates, consumer confidence and a healthy employment market will ensure that housing activity remains busy in the near term.
MCM MoneyWatch’s Sheldon said the strong U.S. labor market is also encouraging workers to move, increasing home sales.
Reaser cited as another factor a 1997 change in the tax law that exempts most home sales from capital gains taxes.
The pace of home sales varied widely across the U.S., the Realtors group said. The West posted the strongest gain from December to January, with an annualized rate of 970,000 units, up 3.2%. In the South, sales rose 3% from December to a rate of 1.7 million units.
In the Northeast, the pace dipped 1.5% to a rate of 650,000 units. In the Midwest, it slowed 2.7% to a pace of 1.08 million.
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Existing-Home Sales
Seasonally adjusted annual rate, in millions of units:
January ‘98: 4.40
Source: National Assn. of Realtors
