- The Washington Times - Tuesday, January 28, 2003

Home buyers took advantage of some of the lowest mortgage rates in decades and catapulted sales of previously owned homes last year to the highest level on record.
The housing market thrived even as the U.S. economy, knocked back by the 2001 recession, struggled last year to regain a solid footing and underwent uneven growth. The lure of low mortgage rates proved irresistible to many people, who opted to make big-ticket financial commitments despite the muddled economic environment.
Previously owned homes sold at an annual rate of 5.56 million last year, shattering the record of 5.30 million reached in 2001, the National Association of Realtors reported yesterday.
"Housing remains one of the sole pillars of strength for the U.S. economy," said Lynn Reaser, chief economist at Bank of America Capital Management. "Consumers remain willing to undertake longer-term commitments in terms of purchases of both autos and homes," she said. While low mortgage rates have stoked home sales, free financing and other incentives have buoyed car sales.
Sales of previously owned homes rose to a seasonally adjusted annual rate of 5.86 million last month, representing a 5.2 percent increase from the level in November. The annualized rate reflects how many homes would sell if the same number of sales in a month continued for all 12 months.
"Exceptionally low mortgage interest rates are the primary factor in record levels of home sales," said David Lereah, chief economist at the National Association of Realtors.
The average interest rate on a 30-year fixed-rate mortgage was 6.05 percent in December, a record monthly low, the association said. For last year, the average rate on a 30-year mortgage was 6.95 percent, the lowest annual average since mortgage company Freddie Mac began tracking them in 1971.
Low mortgage rates encouraged many people to buy homes last year or refinance those they already owned. The extra monthly cash that homeowners save by refinancing mortgages at lower rates has helped consumer spending remain the primary force keeping the economy going.
Another factor motivating home buyers is solid appreciation of housing values. That offers people attractive investment, especially given the turbulent stock market, economists said.
The national median home price last year was $158,300, up 7.1 percent from 2001. The median price is where half sell for more and half sell for less. The 7.1 percent increase was the largest annual increase since 1980, when the median sales price shot up 11.7 percent.
By region, existing-home sales in the West rose 7.5 percent last year from 2001 to 1.49 million. In the Midwest, sales rose 4.9 percent to 1.22 million, and in the South, sales went up 4.1 percent to 2.2 million. In the Northeast, sales increased to 653,000, a 2.4 percent rise from 2001.

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