Home Sales Decline in November, but Record Still Likely for Year

Fewer previously owned homes were sold in November, but sales for all of 2002 are on track for the best year on record as some of the lowest mortgage rates seen in decades beckon people to buy.

The National Assn. of Realtors reported Monday that home resales slipped to a seasonally adjusted annual rate of 5.56 million in November, a 3.5% decline from the previous month.

The slippage came after sales jumped by 5.9% in October to a rate of 5.76 million, the fourth-highest monthly pace on record.

Even with November’s drop, sales remained quite good, racking up the sixth-best month ever and running 5.9% above the sales pace of November 2001.

The housing market has been one of the few bright spots for an economy struggling to regain its footing after being knocked down by last year’s recession.

“Housing has remained a lone oasis of strength, keeping the recession of 2001 mild and helping to keep the economy away from a new recession this year,” said economist Richard Yamarone of Argus Research Corp.

Stoked by low mortgage rates, home resales and sales of new homes are expected to set records this year, outpacing the previous all-time-high sales registered in 2001, economists predicted.

“For all of 2002, we’ll easily surpass the record of 5.3 million sales in 2001, with sales topping the 5.5 million level,” said David Lereah, chief economist for the National Assn. of Realtors.

Low mortgage rates this year encouraged many people to refinance their home mortgages. The extra monthly cash that homeowners save by refinancing mortgages at lower interest rates has helped consumer spending remain the primary force that has kept the economy going this year.

The average interest rate on a 30-year fixed-rate mortgage was 6.07% in November, down from 6.11% in October. Last week, rates on 30-year mortgages dropped to a new low of 5.93%, according to Freddie Mac, the mortgage company. It began tracking mortgage rates in 1971.

Another factor motivating home buyers is solid appreciation of housing values. The national median price for an existing home in November was $161,400, which represented a 9.7% rise from November 2001.