Existing-home sales rise to record pace

Monday, July 26, 2004 | 10:48 a.m.

SUN STAFF AND WIRE REPORTS

WASHINGTON -- U.S. sales of previously owned homes unexpectedly rose to a record 6.95 million annual pace in June, pushing prices to their highest level ever, an industry report showed today.

"When you combine the fact that people are working and we have low mortgage rates, you get a healthy housing market," said Tom Kunz, chief executive of Cendant Corp.'s Century 21 real estate unit. Prices "may not rise like they have in the past but I don't think we'll see a decline."

Existing home purchases increased 2.1 percent from a 6.81 million-unit rate in May, the National Association of Realtors said in Washington. The median selling price rose to a record $191,800.

The economy so far this year had the strongest six months of job growth since 2000, while the average rate on a 30-year fixed mortgage is about a percentage point above an all-time low. Sales of previously owned homes in 2004 are forecast by the Realtors group to surpass last year's record.

Resales account for 85 percent of the residential real estate market. New home sales, which account for the rest, probably fell in June to 1.273 million at an annual rate after a record 1.369 million the previous month, based on a survey of economists before tomorrow's Commerce Department report.

Existing home sales were forecast to fall to a 6.65 million annual rate in June, according to the median estimate in a Bloomberg News survey. Last year, a record 6.1 million previously owned homes were sold.

"It's clear the market has tremendous momentum," said David Lereah, chief economist at the NAR, which is estimating 6.3 million existing home sales. Even so, "it's unlikely we'll top the pace in June but home sales remain very healthy and are likely to stay quite strong."

The median price rose 5.2 percent from May and was up from $175,000 in June of last year, the group's figures showed.

Sales rose in all regions. They increased 3.5 percent in the Midwest to 1.46 million at an annual rate, 3.1 percent in the West to 1.99 million, 2.8 percent in the Northeast to 740,000 and 0.4 percent in the South to 2.76 million.

In Las Vegas, analysis firm SalesTraq reported earlier this month that the new and existing-home markets remained strong locally in June.

The median price of existing and new homes in the Las Vegas area was almost identical in June -- $245,000 and $247,000, respectively, SalesTraq reported.

The median price of existing homes increased from $230,000 in May and $165,000 in June 2003. For new homes, the median price was an increase from $240,950 in May and $200,034 in June 2003.

Bloomberg News contributed to this report.