- The Washington Times - Tuesday, March 26, 2002

ASSOCIATED PRESS
Americans bought fewer previously owned homes in February, but sales still hit the second-highest level on record.
The National Association of Realtors said yesterday that sales of existing homes dipped 2.8 percent to a seasonally adjusted annual rate of 5.88 million, not far off the rate of 6.05 million in January.
Given that, analysts were hopeful that consumer spending, which accounts for two-thirds of all economic activity in the United States, would hold up fairly well in coming months and help along the economic recovery.
"With existing-home sales at near-record levels, we should expect that once households start fixing them up, spending will really soar," said Joel Naroff of Naroff Economic Advisors.
In contrast to past downturns, consumers kept buying homes and other big-ticket goods throughout the recent recession. Because of that, Federal Reserve Chairman Alan Greenspan and others have expressed concerns that consumers would have less pent-up appetite to spend, making for a less-than-sizzling recovery. Some have worried that retrenchment could send the country back into recession.
But top economic forecasters surveyed by the National Association for Business Economics said yesterday a "double dip" recession was unlikely this year.
The median home sale price meaning half sold for more and half for less was $151,000 in February, an 8.2 percent increase from the same month a year ago.
Low mortgage rates, mild weather, increases in home values and generally good consumer attitudes all helped to keep sales at a solid level, economists said.
In February, the average rate on a 30-year fixed-rate mortgage was 6.89 percent, down from 7 percent in January.
But mortgage rates, as tracked by Freddie Mac, have climbed the past three weeks as the country has bounced back from recession. The average rate on a 30-year loan rose to 7.14 percent last week.
Many economists are predicting 30-year rates will reach 7.5 percent by the end of this year.
"As the economy gains momentum, along with an expected rise in mortgage interest rates, home sales may come down to more sustainable levels, but we expect this year's total sales to be very close to last year's record," said David Lereah, chief economist for the Realtors.


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