ales of existing homes was beginning to slow under the
fell a bigger-than-expected impact of steadily rising
2.7 percent in October, a mortgage rates.
fresh sign that the red-hot
housing market is cooling. The The decline in sales pushed the
decline would have been worse number of unsold homes to 2.87
without increased demand from million, the highest level in
displaced hurricane victims. more than 19 years. It would take
4.9 months to deplete that
Though prices rose at the fastest inventory level at the current
clip in more than a sales pace.
quarter-century, the number of
unsold homes rose to the highest The median, or midpoint, price of
level in 19 years. Analysts an existing home sold last month
forecast that this backlog will rose by 16.6 percent to $218,000,
dampen future price gains. compared with October 2004.
The National Association of Economists predicted the buildup
Realtors reported Monday that in unsold homes would help dampen
sales of existing homes and the surge in home prices that saw
condominiums fell by 2.7 percent 69 cities report double-digit
in October, more than double the gains in prices this summer,
1.1 percent decline analysts compared with the third quarter
expected. of 2004.
Economists said the latest The sales slowdown was linked to
report, which showed sales the Federal Reserve's continued
declines in all regions of the campaign to boost interest rates
country, appeared to be a signal to combat the threat of higher
that the booming housing market inflation after the recent surge
in energy prices. the biggest decline in six years.
Most analysts believe housing
will cool gradually to more The 2.7 percent drop in sales of
sustainable levels but will existing homes would have been a
escape the adverse consequences larger 3.2 percent decline
that occurred when the Internet without a boost in activity from
stock bubble burst in early 2000, people relocating after
wiping out trillions of dollars hurricanes Katrina and Rita
in paper wealth and helping to devastated the Gulf Coast.
push the economy into a
recession. But, many real estate Sales surged by 83 percent in
‘insiders' see thing quite Baton Rouge, La.; 32 percent in
diferently, and are forecasting a Mobile, Ala., and 14 percent in
much larger drop in real estate Houston. This more than offset
values because of the huge sales declines of 42 percent in
popularity of 100% interest only New Orleans and 44 percent in
loans used to both in the Beaumont, Texas.
purchase and re-finance of homes
over the past five years. The 16.6 percent increase in the
median sales price was the
The weakness in existing home biggest year-over-year price
sales in October followed an increase since a 17.2 percent
earlier report that construction jump in July 1979. The backlog of
of new homes and apartments fell 2.87 million unsold homes was the
by 5.6 percent last month, the highest since April 1986.
biggest setback in seven months.
Applications for new building By region of the country,
permits, a good sign of future October's biggest sales decline
activity, fell by 6.7 percent, occurred in the Northeast, a drop
of 7.4 percent. Sales were down relocated
1.9 percent in the Midwest and
1.2 percent in the West. Sales Copyright 2005 Promotions
were down 1.8 percent in the Unlimited - All rights reserved
South despite the big gains in
areas where displaced homeowners
About the Author:
Bob Schwartz is a Certified Residential Specialist,San Diego real estate broker http://www.Brokerforyou.com . Bob's other sites are: San Diego downtown real estate: http://www.downtown-san-diego-real-estate.com & a free San Diego For Sale By Owner real estate website at http://www.san-diego-for-sale-by-owner.com
Source: www.isnare.com
