Housing rebounds in September

Don Hogsett, November 4, 2002

Getting a second wind and buoyed by record low interest rates, the broad U.S. housing market sprinted ahead during September, making gains across the board and bounding back from weakness the month before.

The vast market for existing homes, by far the largest segment of the U.S. housing industry, advanced by 1.9 percent to a seasonally adjusted level of 5.4 million units, making up all of the ground lost in a 1.7 percent dip recorded in August when the market took a seasonal breather, the National Association of Realtors (NAR) reported.

And betting the farm that the housing boom is no bubble, builders continued to break ground for new homes at an accelerating pace, with housing starts racing ahead by 13.3 percent, to a seasonally adjusted level of 1.8 million units, the Commerce Department reported.

The highly volatile market for high-cost new homes, subject to frequent revision, inched up a slender 0.4 percent, to a seasonally adjusted 1.0 million units, cementing a solid 1.9 percent increase put up the preceding month.

Scoping out the picture for existing homes, often fueled by entry-level buyers, David Lereah, NAR chief economist, said, "Mortgage interest rates have been on a steady slide since April and reached new historic lows in September, contributing significantly to higher existing-home sales. The lower cost of mortgages has increased housing opportunities and means monthly mortgage costs often are very attractive in comparison with rents."

Looking ahead through the winter months, the NAR forecasts that existing-home sales for all of 2002 will climb by 3.2 percent from year-before levels to a record 5.47 million units.

With the market for new homes still driving higher, sales for all of this year "are now almost certain to surpass last year's all-time record of 908,000," said Gary Garczynski, president of the National Association of Home Builders (NAHB).

"The single-family housing market continues to be a bright spot in the midst of a rather dismal economy," said NAHB chief economist David Seiders.

Housing by region
Month-to-month % change

Existing home sales Housing starts New home sales
Source: U.S. Department of Commerce and the National Association of Realtors.
Northeast -1.6% +13.3% +94.2%
Midwest +8.9 +9.5 -4.1
South +2.3 +11.4 -8.6
West -3.5 +9.8 +2.2

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