WASHINGTON — Sales of previously owned homes set a record high in 2003 as decades-low mortgage rates proved too good for many buyers to pass up.
The National Association of Realtors reported Monday that existing-home sales totaled 6.1 million last year, shattering the previous record of 5.57 million set in 2002. Last year's sales represented a 9.6 percent increase from 2002's level.
Monday's report provided vivid evidence of the red-hot strength of the housing market, which played a main role in keeping the economy going throughout last year. In December, existing-home sales jumped by 6.9 percent from the month before, ending the year on a high note.
"Housing continues to boom," said David Lereah, chief economist at the National Association of Realtors.
Low mortgage rates have powered the housing market.
The average rate on a 30-year, fixed-rate mortgage for all of 2003 was 5.83 percent, the lowest annual average since Freddie Mac began tracking interest rates in 1971.
Lereah predicts that existing-home sales will slow a bit this year, clocking in around 5.80 million, which would still represent a healthy pace.
A slowdown in sales is based in part on the expectations that mortgage rates will drift higher later this year as the economy continues to gain momentum.
The Mortgage Bankers Association projects that 30-year mortgages will end 2004 in the range of around 6.3 percent. That rate would still be attractive to prospective homeowners and would support housing sales, economists said.
In 2003, the median price of an existing home was $169,900, up 7.5 percent from the median price of $158,100 in 2002. The median price is where half sell for more and half sell for less. Last year's increase in home price appreciation was the largest since 1980, when the median price rose by 11.7 percent.
Solid appreciation in home prices along with a refinancing boom last year helped to underpin consumer spending, the lifeblood of the economy.
Regionally, sales of existing homes registered record highs in 2003 in each of the four regions tracked, Lereah said.
In the Northeast, sales totaled 694,000 last year, a 5.8 percent increase from 2002. In the Midwest, sales rose by 8.7 percent to 1.32 million in 2003. Sales in the South came to 2.44 million, a 10.6 percent increase over 2002's level. In the West, sales went up 10.5 percent in 2003 from the previous year to 1.65 million.