Sales of previously owned homes in November posted their best month on record as low mortgage rates enticed buyers to live the American dream.
The National Association of Realtors reported Wednesday that sales, at a seasonally adjusted annual rate, totaled an all-time monthly high of 6.94 million units, representing a 2.7 percent increase from October’s pace.
While some other recent reports raised questions as to whether the high-flying housing market might be losing a bit of altitude, Wednesday’s report suggested the sector is still humming along.
“So far, the stars have been aligned” for the housing market, said David Lereah, the association’s chief economist, referring to low mortgage rates, good demand and a solid economic recovery.
The latest snapshot of demand for previously owned homes was better than economists were expecting. They were forecasting sales to hold steady.
The previous, monthly high record pace of sales — 6.92 million unit — was set in June.
Aided by low mortgage rates, sales of both previously owned homes and new ones are on track to high record highs for all of 2004, analysts said.
The average monthly rate on a 30-year mortgage in November was 5.73 percent. That was down from 5.93 percent for the same month a year ago.
By region, sales went up in all parts of the country, except for the Northeast, where they fell.
Sales in the West increased by 6.5 percent in November from the previous month to an annual rate of 1.97 million units. In the South, sales climbed to a record high level of 2.83 million units, representing a 1.8 percent increase from October. Sales in the Midwest rose 0.7 percent to a pace of 1.39 million units. However, in the Northeast, sales dropped by 1.3 percent to a rate of 740,000.
Addressing overall existing-home sales in November, Lereah said he believes that performance probably marked the peak and that going forward, sales should moderate but still remain healthy.
The median price of a previously owned homes — half sell for more and half sell for less — was $188,200 in November, up a sizable 10.4 percent from the same month last year. That marked the biggest over-the-month percentage increase since July 1987.
Lereah said the rise in home prices isn’t a harbinger of a housing price bubble, but rather reflects the law of supply and demand.
A housing report last week raised questions as to whether the red-hot market might be cooling a bit. A Commerce Department report showed that sales of new homes plunged by 12 percent in November from the previous month. That marked the biggest drop since January 1994.
The sharp drop, however, came after a record high pace of sales logged in October. That pace, economists said, was just too hot to be maintained.
The Federal Reserve, wanting to keep inflation at bay, has boosted short-term interest rates five times this year, each in moderate quarter-point moves. That left a key rate at 2.25 percent. Economists believe the Fed’s gradual approach to raising rates will continue into 2005.