Sales of existing homes soared 4.6 percent in 1999 to a record 5.197 million as Americans feeling prosperous and with money to spend snapped up homes despite rising mortgage rates.
Sales surpassed the previous record of 4.97 million set in 1998, the National Association of Realtors said this week.
In December, however, sales fell 1.4 percent from the month before to a seasonally adjusted annual rate of 5.06 million units.
Economists read the December decline as a sign that rising mortgage rates have begun to dampen demand. "Housing sales are not falling apart, but have stabilized at a high level," said Joel Naroff, head of his own Holland, Pa., economic forecasting firm.
Americans have been feeling wealthy and in the buying mood because of plentiful jobs--last year's unemployment rate of 4.2 percent was the lowest since 1969--tame inflation and stock and bond market gains.
Demand was brisk for existing homes even as interest rates were on an upswing. Some economists said a portion of last year's existing-home sales reflected buyers scrambling to lock in deals before interest rates moved higher.
The average rate on a 30-year fixed-rate mortgage was 7.9 percent in December, compared with 6.7 percent in December 1998. Last week rates hit 8.26 percent, the highest since September 1996.
Economists expect home sales to slow this year but still remain at healthy levels.
The Federal Reserve raised interest rates three times last year to slow the red-hot economy and keep inflation from escalating. The action raised Americans' borrowing costs. Most economists believe Fed policymakers will bump up rates again when they meet next week.
Strong 1999 sales pushed up the value of many homes. The average price of an existing home last year was $168,300, up 5.8 percent from the year before.
For 1999, the median sales price, meaning half sold for more and half for less, was $133,300, up 3.8 percent from the median price in 1998.