Low rates push U.S. home sales to quarterly record

Continuing low mortgage rates propelled first-quarter sales of U.S. existing homes to a quarterly record of 6.68 million units, according to the National Assn. of Realtors. The seasonally adjusted annual rate was up 2.2% from a year ago and exceeded the previous high of 6.59 million units in the fourth quarter of 2002.

In California, first-quarter sales of existing homes fell 3.5% to a seasonally adjusted 573,030 units from last year. But a short supply of listed homes and condos helped drive the median price to a record $337,780, up 14.3% from a year ago.

“Housing is the one leg the economy is standing on now,” said Ethan Harris, chief economist at Lehman Bros., who added that the housing sector was responsible for roughly half of the growth in the economy in the last year.

The South experienced the highest increase in home sales, and the only region to see declines in sales was the Northeast. The sales figures include single-family homes, condominiums and cooperative housing.

Meanwhile, the 30-year mortgage rate averaged about 5.84% in the first quarter, and rates hit their lowest levels in about four decades in mid-March, according to Freddie Mac.

The continuing decline in rates prompted the Mortgage Bankers Assn. of America to raise its forecast for 2003 to a record-breaking $3-trillion home loan volume. Refinancings will account for about $1.95 trillion, or 65%, of the total.