Tuesday, July 26, 2005

Sales of Existing Homes Set Record Pace in June

July 25, 2005
By VIKAS BAJAJ New York Times

Data : Existing Home Sales http://www.realtor.org/Research.nsf/Pages/EHSdata

The nation's roaring housing market set its second record in three months as sales of existing homes climbed 2.7 percent in June, to 7.33 million, according to a report released today.
Low mortgage rates and strong demand drove the frenetic sales activity, which far exceeded analysts' expectations. Median prices rose 14.7 percent from a year ago, to $219,000. Average sales prices climbed 9.4 percent, to $268,000.
The National Association of Realtors' report provides yet another sign that the housing market remains vibrant and continues to be a big player in the nation's economic expansion. The health and sustainability of home sales has been a subject of much discussion by economists and policy makers.
The regions showing the greatest gains in prices were the West and the Northeast, where median prices rose 17.4 percent and 13.6 percent, respectively. The other two regions - the Midwest and the South - showed smaller, but healthy gains of 12.7 percent and 9 percent, respectively.
Existing home sales for June broke a record set in April, when 7.18 million homes traded hands. Sales fell slightly in May to 7.14 million. Analysts had been expecting 7.15 million sales in June.
"But sales cannot continue to rise at this pace," Ian Shepherdson, chief United States economist for High Frequency Economics, wrote in a note to clients. "They probably cannot even remain at their current level for long."
Historically low mortgage rates have been attributed for a steep rise in sales and housing prices over the last few years, prompting some economists to suggest the nation is experiencing a housing bubble that will eventually burst and deal the economy a significant setback.
Nationally, median prices are 40.2 percent higher today than they were in 2002. In the West and the Northeast, the regions with the greatest growth, they are up 49.9 percent and 56 percent, respectively.
Even the National Association of Realtors, which represents real estate agents, suggested the price growth cannot continue in perpetuity.
"Eventually, appreciation rates will slow and come down to normal levels when the shortage of homes on the market improves and comes closer into balance, hopefully, by the second half of next year," Al Mansell, the association's president, said in a statement.
Alan Greenspan, the Federal Reserve chairman, told Congress last week that housing prices in some areas may well fall, but he noted that such corrections would not necessarily harm the economy.


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