Home sales reach record high

Escalating interest rates push buyers - particularly in bay area - to snap up that previously owned house as soon as possible.

Compiled from Times wires
© St. Petersburg Times
published August 26, 2003

WASHINGTON - Rising mortgage rates pushed buyers off the fence and into the housing market in July, sending sales of previously owned homes to a record high.

The National Association of Realtors said Monday that sales of previously owned homes soared to a seasonally adjusted rate of 6.12-million in July.

The previous record was a rate of 5.94-million, set in December 2002 and matched in January.

Last month's record rate was a 5 percent increase over the June rate of 5.83-million.

Also, the sales pace for existing homes was up 13.8 percent in July from the same month a year earlier.

As in past months, sales rose even more dramatically in Florida, and particularly in the Tampa Bay area, according to the Florida Association of Realtors.

Statewide the number of sales in rose 16 percent to 19,724 in July over a year earlier. The median sales price increased 13 percent to $164,000, up from $144,700 in July 2002.

The Tampa/St. Petersburg/Clearwater area led the state in total home sales, reporting a 33 percent increase to 3,289 transactions during the month. The median sales price was $151,000, up 8 percent from $139,000 a year ago.

Economists said that lookers turned into buyers over fears that rising mortgage rates would go even higher.

"When mortgage interest rates first began to rise from record lows, it appears some buyers jumped into the market to take advantage of good affordability conditions before interest rates moved even higher," said David Lereah, chief economist for the National Association of Realtors.

The national average rate for a 30-year conventional, fixed-rate mortgage was 5.63 percent in July, up from a record low of 5.23 percent in June, according to Freddie Mac, the mortgage giant.

Last week, rates on 30-year mortgages rose again - the seventh increase in the past eight weeks - to 6.28 percent.

Most economists think that rates on 30-year mortgages, which are more than a full percentage point above their four-decade low, will climb even higher as investors see further indications that the economy is beginning a sustained rebound.

That compelled many home buyers to act quickly to get the best possible rate. July's sales of previously owned homes was almost 14 percent above the 5.38-million pace logged a year ago.

The national median existing home price - where half sell for more and half sell for less - was $182,100 in July, a 4 percent increase from $175,000 in June and up 12 percent from $162,400 a year ago.

"This is the strongest national price increase since November 1980, a reflection of tight inventories in a record market," Lereah said.

Bay area real estate brokers and salespeople said August, normally a slower month for residential sales, has lost some steam. Buyers have been vacationing. Families that wanting to be in a different school district have already made their move. And interest rates keep rising.

"The first three weeks of the month were strong, but I noticed on Friday that the phone was not ringing as much because interest rates went up," said Kim Deetz, a broker with Pyramid Realty in Pinellas Park.

"But business is still brisk," said Leonard McMulty, sales manager for Century 21 Grant Realty in Seminole.

"It's a bit slower than July but still stronger than last August," said Mary Odum, a broker associate with Coldwell Banker in Brandon.

Prices are holding up and the length of time it takes to sell a properly priced home have not changed as a result of the higher rates, several real estate executives said.

"The market is still strong," said Paul Hornsleth, president of R. W. Caldwell Realty in Gulfport. "Mortgage rates may be higher, but, except for the low of a few months ago, these are the lowest I can recall in my 29 years here."

Previously owned homes are the biggest chunk of the housing market. Sales jumped 7.7 percent in the Northeast to a rate of 700,000 in July. In the South, existing-home sales were up 7 percent to a rate of 2.45-million. In the Midwest, sales also rose 3.9 percent to a pace of 1.34-million, and in the West, sales climbed 1.9 percent to a rate of 1.63-million.