Washington,
DC, Sept. 26—Americans snapped up existing homes in August, pushing sales to
an all time monthly high. But demand has slowed since then as prospective
buyers, shaken by the deadliest attacks in U.S. history, hold off on big ticket
spending.
Sales of previously owned homes jumped to a seasonally adjusted annual rate of
5.5 million, a 5.8% increase from July, the National Association of Realtors
reported Tuesday. That surpassed the last record of 5.45 million set in June
1999, when the economy was booming.
Even before the Sept. 11 attacks on the World Trade Center and the Pentagon, the
economy was in bad shape. But solid housing activity has been a main force
keeping the economy from slipping into reverse.
“Like everything else, this bright spot in the American economy has been
eclipsed by the events of September 11,'' said David Lereah, the association's
chief economist. “Our internal tracking shows a downturn following the attack
on America, and there will be some natural pullback from big ticket purchases in
the months ahead given uncertainty over the future.”
For all of 2001, Lereah predicts existing home sales will clock in at 5.19
million, a 1.3% increase from 2000. Activity this year is being aided by low
mortgage rates. In August, the average rate on a 30 year fixed rate mortgage was
6.95%, compared with 8.03% for the same month a year ago. Last week, rates fell
to 6.80%, the lowest of this year.
The National Association of Realtors joined other groups and economists in
predicting in the aftermath of the attacks that the economy will tip into a
recession. The association predicted the economy will contract by 0.6% in the
current quarter and by 0.2% in the fourth quarter. But the group expects a
recovery next year, forecasting a 3.4% growth rate by the second quarter of
2002.
By region, sales rose by 9.8% in the West to an annual rate of 1.46 million in
August. They were up by 6.2% in the Northeast to a pace of 690,000. In the
South, sales grew by 5.3% to a rate of 2.18 million, and in the Midwest, they
increased 2.6% to a rate of 1.17 million.
The rise in overall sales in August lifted prices. The median existing home
sales price rose 8% to $154,700 in August from the same month a year ago.
Joel Naroff of Naroff Economic Advisors expects home sales to slow in the coming
months given the attacks, rising unemployment, which jumped to 4.9% in August,
and sagging consumer confidence. But he's not giving up on consumers, a key
force that has kept the economy afloat.
“When households finally decide to personalize their new homes, consumer
demand could surge,” Naroff said. “That holds out hope that when we get to
the rebound, it could be a lot stronger than many now think.”
Copyright
2001 Floor Focus Inc
