Home Sales Dip but Stay Strong; Stock Volatility, Oil Prices Cited
Americans bought fewer homes in September as stock market turbulence and surging oil prices discouraged prospective buyers, economists said. Even with the dip, existing-home sales are on track to turn in another stellar year.
Sales of previously occupied single-family homes slipped 2.7% last month to a seasonally adjusted annual rate of 5.14 million, the National Assn. of Realtors reported Wednesday.
“There’s been a lot of volatility and uncertainty. Consumers don’t like to make such a large purchase if they are concerned about the economic environment,” said economist Richard Yamarone of Argus Research Corp.
Even with last month’s cheaper mortgage rates, consumers held back. Stocks were battered and crude-oil prices hit a 10-year high, making gasoline and heating oil more costly, economists said. These factors tend to dampen spending.
The Federal Reserve has raised interest rates six times since June 1999 to slow the economy. The Fed’s rate increases are designed to make borrowing more expensive and soften demand for costly items such as homes and cars.
While those rate increases have pushed up mortgage rates in the last 12 months, the housing market has performed remarkably well, economists said. September’s existing-home sales were running just 0.2% lower than the rate for the same month last year. Economists expect sales to slow this year but remain at healthy levels.
“The modest change in September is reassuring in terms of stability,” said First Union’s chief economist, David Orr.
In California, the median price of an existing single-family detached home climbed last month to $248,020, a 13.4% rise over the same period a year ago, according to the California Assn. of Realtors.
Sales of existing homes in the state dipped 0.6% to 566,630 from September 1999.
In San Francisco, prices posted a 21.5% rise over last year, and sales dipped 5.1%. The drop in sales reflects a dwindling housing stock, not a cooling trend, experts say.
Economists said the solid outlook for the housing market bodes well for spending in coming months.
“When homes are purchased, that is just the beginning of the spending on the house. What follows for a long time are the fix-up and the buying of new furnishings and all the other spending that goes along with moving into a new residence,” said economist Joel Naroff of Naroff Economic Advisors.
Many analysts had expected September’s sales to fall by about 4.2% to a rate of 5.05 million, given a big jump in August’s sales.
“The present sales pace is on track with what we’re expecting for the year, settling into a strong housing market that is just below the record volumes we saw in 1999,” said Dennis Cronk, president of the Realtors association. In 1999, the industry posted record sales of 5.2 million.
The median existing-home sales price, meaning half sold for more and half for less, was $141,800 in September, up 5.5% from the same month a year ago.
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Existing-Home Sales
Seasonally adjusted annual rate, in millions of units:
September: 5.14 million
Source: National Assn. of Realtors
