Housing keeps humming along

Don Hogsett, November 3, 2003

With mortgage rates persistently low, the job market improving and consumers feeling better about the economy, the broad U.S. housing market kept purring like a kitten during September, with sales of existing homes at an all-time high and housing starts rising by 3.4 percent.

New home sales, a volatile number subject to frequent revision and month-to-month swings, were virtually flat, easing off by 0.2 percent, following a revised gain of 1.1 percent the month before.

Underlining the continued strength of the housing market, a major under-pinning of the economy, sales of existing homes, by far the largest segment of the market, now stand 20.8 percent above year-ago levels at a seasonally adjusted level of 6.7 million units, up from 5.5 million units during September of 2002, the National Association of Realtors reported.

David Lereah, NAR chief economist, said, "We knew the September pace for existing-home sales was going to be a big number, but after setting records in July land August we thought the pace might start to slow."

Near-record-low mortgage rates continue to drive the housing market, and Freddie Mac reported the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.15 percent in September, down from 6.26 percent in August. It was modestly above the 6.09 percent level of September 2002.

Housing inventory levels at the end of September dropped 1.2 percent from August to a total of 2.4 million existing homes available for sale, a 4.3-month supply at the current sales pace.

The median existing-home price was $172,300, up 9.1 percent from September 2002. The median is a typical market price where half of the homes sold for more and half sold for less.

Housing by region
Month-to-month % change

Existing home sales Housing starts New home sales
Northeast 7.0% 15.1% 26.0%
Midwest 4.4 8.1 -18.0
South 0.8 -1.3 -2.5
West 5.1 4.2 12.4

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