- The Washington Times - Tuesday, January 28, 2003

WASHINGTON, Jan. 28 (UPI) — The Commerce Department said Tuesday that new home sales rose to record levels in December, lifted by the lowest mortgage rates in 40 years.

The government agency said new home sales jumped 3.5 percent during the final month of 2002 to a record seasonally adjusted annual rate of 1.082 million units.

Economists on Wall Street were expecting new home sales to decline 2.7 percent during the month.

For all of 2002, sales rose to a record 976,000 beating the 2001 rate of 908,000 units.

New homes account for about 15 percent of all houses sold and sales for the industry lead to spending on construction supplies, appliances and furniture.

The sector has shown strength in recent months as falling mortgage rates attracted homebuyers.

Mortgage interest rates have been hovering below the key 6 percent level for several weeks after peaking in May 2000 and analysts believe the low mortgage rates should prop up home sales in the months ahead.

The latest report showed the inventory of homes available for sales fell to 3.8 months' supply in December from 3.9 months in November.

The Commerce Department said the median price of a new home rose 7.2 percent in December to $186,400 from $173,800 in November. The median new-home price rose 3.4 percent during all of 2002.

The number of new homes that were priced from $150,000 to $199,900 accounted for 25 percent of all sales in December while homes priced higher than $300,000 made up 23 percent of sales.

By region, sales jumped 28.3 percent in the Midwest to 299,000 units, were unchanged in the South at a 462,000-unit rate and declined 7.5 percent in the West to an annual pace of 273,000 units. Sales also declined 12.7 percent in the Northeast to 48,000 units.

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