Fewer previously owned houses were sold in November, but home 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 Association of Realtors reported yesterday that sales of existing homes slipped to a seasonally adjusted annual rate of 5.56 million in November, a 3.5 percent decline from the previous month.
The slippage came after sales jumped 5.9 percent in October to a rate of 5.76 million, the fourth-highest monthly pace on record.
Even with the drop in November, sales remained quite good, racking up the sixth-best month ever and running 5.9 percent above the sales pace of November 2001.
The housing market has been one of few bright spots for the economy, which is struggling to regain its footing after being knocked down by the recession last year.
“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, sales of both existing and 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 Association of Realtors.
Low 2002 mortgage rates encouraged many people to refinance 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 percent in November, down from 6.11 percent in October. Last week, rates on 30-year mortgages dropped to a new low of 5.93 percent, according to Freddie Mac.
Another factor motivating home buyers is solid appreciation of housing values. That offers people attractive investments, especially given the turbulent stock market, economists said.
The national median price for an existing home in November was $161,400, up 9.7 percent from November last year and the biggest monthly increase since July 1987, Mr. Lereah said.
Realtors predict that for all of 2002, the median housing price will show a 7 percent increase from the previous year, which would be the largest annual gain since 1980.
The government reported last week that sales of new single-family homes in November jumped 5.7 percent to a seasonally adjusted annual rate of 1.07 million, the highest monthly level on record.
Economists had predicted that sales of existing homes would slow in November after registering such a brisk pace in October.
By region, sales of existing homes in the Midwest fell 3.9 percent in November from the previous month to a rate of 1.22 million. In the South, sales dropped 4.8 percent to a rate of 2.2 million, and in the Northeast, sales went down 5.9 percent to a pace of 640,000. In the West, sales were flat at a rate of 1.5 million.