- The Washington Times - Thursday, October 26, 2000


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 percent last month to a seasonally adjusted annual rate of 5.14 million, the National Association of Realtors reported yesterday.

"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, adding that these factors tend to dampen spending.

The Federal Reserve has raised interest rates six times since June 1999 to slow the red-hot economy to a more sustainable pace. The Fed's rate increases are designed to make borrowing costs more expensive and soften demand for costly items such as homes and cars.

While those rate increases have pushed mortgage rates up over the last 12 months, the housing market has performed remarkably well, economists said. September's existing-home sales were running just 0.2 percent lower than 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.

Economists said the solid outlook for the housing market an engine of the robust economy bodes well for brisk spending by consumers 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 around 4.2 percent to a rate of 5.05 million, given the big jump in August's sales.

"The present sales pace is on track with what we're expecting for the year, settling in to a strong housing market that is just below the record volumes we saw in 1999," said Dennis Cronk, president of the association. In 1999, the industry posted record sales of 5.2 million.

Existing-home sales soared 9.5 percent in August. Economists attributed that gain to cheaper mortgage rates.

In September, mortgage rates continued to creep down. The average interest rate on a fixed-rate 30-year mortgage was 7.91 percent last month, down from 8.03 percent in August, but higher than the 7.82 percent rate in September 1999.

By region, the Northeast posted the biggest decline in sales of existing homes an 8.8 percent drop in September to a seasonally adjusted annual rate of 620,000.

In the Midwest and in the South, sales fell 3.5 percent to a rate of 1.11 million and 1.94 million, respectively. But in the West, sales rose 2.1 percent to a rate of 1.47 million.

The median existing-home sales price, meaning half sold for more and half for less, was $141,800 in September, up 5.5 percent from the same month a year ago.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2020 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide