Starts down, rest of market sturdy
June 2, 2003,
Staying the course despite a soft economy and a weak employment outlook, the broad U.S. housing market turned in a sturdy performance during April, with two of the three market segments — existing and new home sales — both making gains.
The strong sales, better than some economists had expected, helped stifle fears raised by a February decline that the housing market could be a bubble waiting to burst.
Existing home sales — by far the largest slice of the domestic housing pie, climbed by 5.6 percent, canceling out a 5.6 percent decline recorded the month before. And the rapid conclusion to the war in Iraq had a lot to do with it, said David Lereah, chief economist of the National Association of Realtors. "Consumer confidence rose following the swift action in Iraq, mortgage interest rates have been at record lows and new-home sales rose sharply in March," he said. "The favorable conditions in April caused existing-home sales to rise to their fifth-best showing ever — a pace that will be difficult to sustain but demonstrates that the housing sector will be close to a record this year."
Persistently low mortgage rates remain a major driver of the market. Freddie Mac reported the national average commitment rate for a 30-year fixed-rate mortgage was 5.81 percent in April, up slightly from 5.75 percent in March, but still well below the year-ago level of 6.99 percent.
After shooting up by a revised level of 8.1 percent in March, sales of new homes climbed again in April, edging up by 1.7 percent, the Commerce Department reported.
Given the strength in new home sales, the supply of new homes on the market fell to 3.9 months from 4.1 months in March, the lowest supply level since last September.
Housing by region
Month-to-month % change
|Existing home sales||Housing starts||New home sales|
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