Sales of previously owned single-family homes slipped in November from October's blistering pace, but the housing market is still headed for its best year ever, according to the National Association of Realtors.
The association reported yesterday that the sales pace of existing homes fell 3.5 percent from October to a seasonally adjusted annualized rate of 5.56 million units in November. October's annualized rate was 5.76 million homes sold.
But October resales had been higher than expected in an otherwise tight-fisted economy, said David Lereah, the association's chief economist. The reason, Lereah and other experts agree, is the historically low interest rates for home mortgages. Sales of existing homes jumped 5.9 percent in October from September, resulting in the fourth-highest monthly pace on record.
Even with the slight dip in resales, November was the sixth-best month ever. Sales were up 5.9 percent from November 2001, the association said.
The annualized monthly rate reflects how many homes would sell if the same number of sales in a month was maintained for 12 months.
Because rates are so low and housing inventories show few signs of increasing, Lereah predicted total sales of existing homes in 2002 will "easily surpass" last year's record of 5.3 million, coming in somewhere above 5.5 million.
Observers had expected November's resale figures to dip from October, but not as much as they did. The November resales pace fell short of the expectations of analysts polled by Reuters, who, on average, had forecast 5.63 million units.
"It was a larger decline than expected, but the numbers are volatile on a monthly basis," said Mark P. Vitner, senior economist at Wachovia Bank in Charlotte. "The housing market is about as strong as it can physically get."
Despite the dip, Lereah pointed out that not only are sales of existing homes strong, but so are sales of new homes and housing starts.
The Commerce Department said last week that new home sales surged 5.7 percent in November, to a record 1.07 million annualized rate.
The bottom line, Lereah said, is that the housing market remains one of the few bright spots in a struggling economy. He predicts it will continue to be for the near future because mortgage rates continue to drop.
The national average rate for a 30-year conventional fixed-rate mortgage was 6.07 percent in November, a record low from 6.11 percent in October, according to Freddie Mac. And in the week that ended Friday, 30-year rates fell to 5.93 percent, Freddie Mac said, resulting in the lowest national level since 1965.
The Realtors association also reported yesterday that the national median price for an existing home in November was $161,400, a 9.7 percent jump from November 2001 and the biggest monthly increase since July 1987. For 2002, the group expects median housing prices to show a 7 percent gain, which would be the largest annual increase since 1980.
Regionally, houses in the South, which includes the D.C. area, had a median price of $151,000, up 8.2 percent from a year ago. But Lereah said the Washington region should be enjoying higher price gains because inventories continue to be tighter than the national numbers.