- The Washington Times - Tuesday, February 26, 2002

Sales of existing homes soared an unprecedented 16.2 percent to a record 6.04 million units in January as historically low mortgage rates, rising consumer confidence and mild weather prompted Americans to buy houses even during a recession.
"The housing market is still on fire," said Joel L. Naroff, president and chief economist at Naroff Economic Advisors. "OK, mild weather helped, but let's get real: People don't go out and buy houses if they are worried about the future, even if mortgage rates are fairly low and the sun is shining brightly. This was a clear vote of confidence in the economy."
Strong housing sales are important to the economy because new homeowners tend to spend money on their residences, buying everything from furniture and new televisions to decorations, paint and new toilets.
Local agents, who have had a strong run for the past three years, say the shortage of available homes and rising prices are also fueling sales.
"I just think people are buying what they want the inventory is low, so if they see what they want, they buy it," said Yolanda Mamone, a broker with Randall H. Hagner & Co., in Northwest.
"Inventory is low, and demand is high," she said. "There's nothing complicated about that."
The supply of available homes nationwide fell to 4.1 months' worth in January, from 4.2 months' worth the previous month, according to the National Association of Realtors, which released yesterday's report.
Economists said the positive housing data shows a step toward an overall economic recovery, because consumer confidence is on the rebound.
"Buying a home is a long-term commitment, and consumers feel good about the future, so they are making the big purchases," said Lawrence Yun, an economist with the realty group. "Particularly given the favorable, low mortgage rates … which enlarge the pool of eligible buyers."
Thirty-year fixed mortgages are at historic lows, averaging 7 percent in January, down from an average of 7.07 percent in December, according to mortgage giant Freddie Mac. Last week, the rate fell to an average 6.81 percent.
The low rate has prompted a rise in mortgage applications too. The number of people seeking loans for home purchases rose to a record high in the first week of January, according to the Mortgage Bankers Association of America.
House prices were higher than a year ago, although they fell from December's median price. The median price was $151,100 last month, up 10.2 percent from a year earlier, though down from $153,000 in December.
Home sales were high in all regions, the real estate data show. But the Northeast had one of the highest records, with a 16.4 percent jump to a 710,000-unit annual pace. Only the West outpaced the region, with a 23.3 percent increase at a 1.64 million-unit rate.
"The market is on fire," said Kristin Gerlach, a broker at Gerlach Real Estate in Chevy Chase. "I was at a contract presentation earlier this week, and there were nine offers for the house. There were seven at another offer the week before, and three on another. I don't think I've been to one this year where there was a single offer on a property."
Jim Callaghan with Weichert Realtors in Montgomery Village said it has been as easy to sell a $100,000 house as one worth six times that.
"If you have a $150,000 town house you can sell it many, many times right now in this market," he said.
The District is selling particularly well, because its housing shortage is more pronounced, but all close-in suburbs are seeing a strong market, brokers say.
"January was not just the best January, but one of our best months ever," said Miss Mamone, whose sales for the month ranged from $85,000 condos to $1.7 million homes.
"D.C. is just red hot," she said. "But Maryland and Virginia are doing well. Bethesda, Chevy Chase Village, Rockville they are doing well, as is close-in Northern Virginia."
The booming market comes as somewhat of a surprise because January is typically slower for the real estate business.
Agents are relieved because they had expected a slowdown when the economy fell into recession last year and were more concerned after the September 11 terrorist attacks.
"It seemed last summer that we were going to see a cooling-off, but nobody knew what it would be 5 percent, 10 percent," Miss Mamone said. "And then 9/11 occurred, and we thought, 'Now it will be 20, 25 percent.' But after the second week of October, it did nothing but climb again."
Furniture sales rose 0.4 percent last month, the fourth-straight increase, after rising 1 percent in December, according to the Commerce Department. The last time sales rose for four consecutive months was February-May 2000.
"Home furnishings and furniture have been faring rather well these past few months," said Scott Krugman, a spokesman for the National Retail Federation.
January sales rose 2.5 percent from a year earlier, while December's sales grew 9.5 percent from December 2000, according to the retail group.
"Appliances are also doing very well," he said. "Especially home electronics, like stereos … microwaves, toasters, knives."
For instance, Lowe's, the second-largest home-improvement retailer, reported yesterday that its fiscal fourth-quarter profit rose a greater-than-expected 55 percent from a year earlier. Lowe's also said it expects first-quarter profits to exceed analysts' estimates.
La-Z-Boy Inc., the nation's largest home-furniture maker, also had strong sales. Last week, the company said fiscal third-quarter profits rose 35 percent from a year earlier as sales of sofas and recliners increased.

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