Monday, Oct. 25, 2004 | 11:16 a.m.
BLOOMBERG NEWS
U.S. sales of previously owned houses rose in September to the third-highest pace on record, evidence that favorable borrowing costs were luring buyers and helping sustain the economic expansion.
The 3.1 percent increase brought sales last month to 6.75 million single-family houses at an annual rate from 6.55 million in August, the National Association of Realtors said today in Washington. The pace was a record 6.92 million in June. The association forecasts 2004 to be the best year ever for sales.
Declining mortgage rates are luring buyers to the market even as rising oil prices and lackluster job growth weigh on the economy, the world's largest.
"The market's still alive," Timothy Rogers, chief economist at Briefing.com in Boston, said before the report. "Interest rates are still incredibly low. I don't expect a really strong rise in long-term rates."
In the Las Vegas area, there were 5,079 recorded resales in September, a slight dip from August's 5,851 recorded resales, Home Builders Research Inc. reported. September's resales bring the number of resale homes sold this year to 50,942, a year-to-year increase of 14,451 sales.
The median forecast called for U.S. resales to fall to 6.51 million from a previously reported 6.54 million for August. The 58 estimates ranged from 6.25 million to 6.85 million.
Resales account for 85 percent of the residential real-estate market. Sales were a record 6.1 million last year. The association forecast on Oct. 5 that sales this year would climb to 6.49 million in 2004 before easing back.
Purchases of existing homes are tabulated when transactions close, often a month or two after a contract is signed, and mortgage costs may encourage home sales this year.
The average rate on a 30-year fixed mortgage was 5.76 percent last month, down from 5.87 percent the month before, according to Freddie Mac, the second-biggest U.S. purchaser of home loans. Rates have since fallen further, ending last week at 5.69 percent. All are within a percentage point of the four-decade low, 5.21 percent, reached last year.
Applications for mortgages to buy houses rose in September from August, according to an index from the Mortgage Bankers Association. The index rose again in mid-October after two declines.
The median selling price of an existing home in the United States was $186,600 last month, down from $188,800 in August, for the lowest since May.
The inventory of houses for sale slipped to 4.4 months' supply from 4.5 months.
The growth in the number of available houses "is a good sign because we've had nationally a shortage of inventory that has caused some impatient buyers to pay premium prices for property," Daryl Jesperson, chief executive of Re/Max International Inc., the brokerage franchiser, said in an interview. "We'll be going into a more balanced market where the buyer isn't forced into making a bid on a house five minutes after he saw it."
Federal Reserve Chairman Alan Greenspan last week dismissed the idea of a nationwide "bubble" in housing prices that that leaves the U.S. economy vulnerable.
"While local economies may experience significant speculative price imbalances, a national severe price distortion seems most unlikely in the United States," Greenspan said Oct. 19 in a speech to the American Community Bankers in Washington.
The Commerce Department will release its report on new home sales in September on Wednesday.
Sales rose in all regions except the South, a decline that the association attributed to the three hurricanes that pummeled the state.
Sales rose 4.1 percent in the Northeast to an annual rate of 760,000; 3.7 percent in the Midwest to 1.39 million and 7.8 percent in the West to 1.93 million. They fell 0.7 percent in the South to 2.67 million.
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