Sales of existing U.S. homes rose by a much stronger than expected 6.9 percent in December, the National Association of Realtors said on Monday, taking the full year to a new record rate.
Sales of previously owned homes rose to a seasonally adjusted annual rate of 6.47 million units from a revised 6.05 million in November. Wall Street economists surveyed by Reuters had forecast December existing home sales at a 6.10 million unit rate.
“Housing continues to boom because interest rates are still at historic lows,” said David Lereah, chief economist at NAR.
NAR said that there had been 6.1 million homes sold in existing homes in 2003, shattering the old record of 5.56 million in 2002.
NAR also said prices rose 7.5 percent last year versus 2002, the highest rise since 1980 when prices rose 11.7 percent.
Lereah said this rise was no sign of an overheating property market, rather demand outstripping supply. “There is no bubble ... the reason we have got such strong price appreciation is because we’ve got lean inventories.”
Inventories fell in December by 7.3 percent compared to the previous month to a total of 2.23 million homes for sale, which NAR said was equal to 4.3 months’ supply at the current pace of sales.
“We have a supply problem in this country, not a demand problem,” Lereah said.
The NAR expected the first quarter to continue strong but the pace of sales to moderate this year as mortgage rates edge up in the months ahead. It projected a 4 percent sales decline in 2004 compared with 2003.