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		Home Page We're about Mortgage News You Can Use   Home Resales in U.S. Rise to 6.47 Million Rate, Ending Best Year on Record Jan. 26 (Bloomberg) -- U.S. sales of previously owned homes jumped to a 6.47 million annual pace in December, concluding a record year in which prices had their biggest rise in more than two decades. Existing home sales rose 6.9 percent from a 6.05 million rate in November, the National Association of Realtors said in Washington. For all of 2003, sales reached 6.1 million, shattering the previous high of 5.57 million a year earlier. The median selling price increased 7.5 percent, the largest rise since 1980. The real estate group forecasts sales in 2004 will be the second highest ever, fueled by a stronger economy. Federal Reserve policy makers are expected to hold their target interest rate steady on Wednesday to help nurture the expansion amid low inflation. Mortgage rates last month held close to a 45-year low reached in June and employment grew for a fifth month. ``We finished the year real strong, driven by low interest rates and an improvement in the economy,'' said Daryl Jesperson, chief executive officer of Re/Max International Inc., in an interview. Re/Max, based in Greenwood Village, Colorado, is the No. 1 U.S. real estate broker ranked by number of homes sold. ``Unless we have a rapid escalation in interest rates, which isn't very likely, things look really good.'' Economists surveyed by Bloomberg News had expected home resales would rise 0.7 percent to a 6.1 million annual pace following November's previously reported 6.06 million rate. The brokers' group projects 5.85 million homes will be sold this year. Resales account for 85 percent of the residential real estate market. Prices Rise The median price of a home rose 1.9 percent to $173,200 last month from $169,900 in November. The increase for the whole year was the biggest since an 11.7 percent jump in 1980. The association projects the median prices will rise 4.6 percent this year. ``There's no bubble in housing,'' said David Lereah, the association's chief economist. ``We have a supply problem in this country, not a demand problem.'' The supply of homes available for sale, another gauge of housing demand, fell to 4.3 months' worth in December from 4.9 the previous month. The number of months' supply at 4.3 hasn't been lower since December 2001, when it was 4.1 months. Sales were higher in all four regions. They rose 9.4 percent in the Midwest to a 1.39 million-unit pace, 7.9 percent in the West to a rate of 1.77 million units, 5.3 percent in the South to 2.58 million and 2.9 percent in the Northeast to 720,000. `Best of All Worlds' ``Housing has the best of all worlds,'' Lereah said. ``We have a growing economy and historically low interest rates, the best mix possible for housing.'' The benchmark 10-year Treasury note fell 5/32, pushing up the yield 2 basis points to 4.10 percent, at 12:40 p.m. in New York. A basis point is 0.01 percentage point. A drop in rates so far this month may be giving sales an added boost. An index of mortgage purchase applications for the week ended Jan. 16 rose to the highest on record, the Mortgage Bankers Association said last week. The 30-year fixed mortgage rate has averaged 5.76 percent this month, according to Freddie Mac, the No. 2 buyer of U.S mortgages. A 45-year low of 5.21 percent was reached last June. ``The demand side of our business is excellent,'' said Donald Tomnitz, chief executive of D.R. Horton Inc., the third- largest U.S. homebuilder by stock market value, in a televised interview with Bloomberg News Thursday. ``In the first part of January here we are seeing our sales still as strong as the previous quarter. We are looking forward to a good, solid quarter.'' Mortgage Rates Arlington, Texas-based D.R. Horton announced last week it sold 9,242 homes in the quarter ended Dec. 31, 23 percent more that the same period the previous year. The National Association of Realtors forecasts the 30-year mortgage rate will average 6.5 percent this year following an average 5.83 percent in 2003. The forecast is 0.1 percentage- point higher than the group projected last month. The monthly payment on a $100,000 mortgage at a 6.5 percent 30-year fixed rate would be $632.07, compared with $549.73 when the rate reached a low of 5.21 percent in June. The average rate during the last 10 years was 7.34 percent. The monthly payment at that rate is $688.29. An index of homebuyer affordability was 136.6 in the third quarter of last year, up 5.3 percent from the 1990-1999 average according to the NAR. Low rates and record sales are keeping builders busy. Last year, 1.848 million homes were started, the most since 1978, the Commerce Department said last week. Sales of Home Furnishings Home sales help contribute to economic growth as new owners buy items such as appliances and furniture. ``Consumers have been more positive, and we see that in their making commitments in home furnishings,'' said Farooq Kathwari, chief executive of Ethan Allen Interiors Inc., a furniture maker with 311 stores, in a radio interview with Bloomberg News last week. Fortune Brands Inc., the maker of home products such as Moen faucets, said Friday that profit climbed 19 percent as increased home remodeling helped to boost sales of the company's cabinets and hardware. Revenue from home and hardware products including Omega kitchen cabinets and Waterloo workbenches surged 28 percent as the record sales of previously owned homes last year prompted more spending on renovations. For all of last year, retail sales rose 5.6 percent, the strongest year since 2000, following a 3.1 percent increase in 2002, according to figures form the Commerce Department. Furniture sales rose 5.5 percent for the year and appliance and electronic stores sold 6 percent more merchandise. The economy will probably expand 4.6 percent this year, the best performance since 1984, according to the median estimate of economists surveyed this month by Blue Chip Economic Indicators. The world's largest economy is forecast to have grown 3.1 percent in 2003. Last Updated: January 26, 2004 12:42 EST   Back to Original Article: Mortgage News You Can Use   Continue with: Greenspan is confident lost jobs will be replaced CBO Projects Record Deficit Weak Dollar Helps U.S. Firms, for Now U.S. Budget Office Deepens Fiscal Gloom for Bush U.S. Budget Office Deepens Fiscal Gloom for Bush Part Two Treasuries in No Mood for Risk Before Fed Rates on Short-Term Treasury Bills Rise Clinton Criticizes Bush Administration On Economy Greenspan: Flexible economy will replace jobs US Treasury's Snow: Global growth to top G7 agenda US TREASURY OUTLOOK-Consumer mood is market focus What the Fed is considering at FOMC meeting Hill budget office sees 10-year deficits totaling nearly $2.4 trillion Dollar Trade Choppy Before G7 Meeting Major business and economic events Economic growth could be derailed by soaring energy prices
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