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Sales of existing homes jump 3.1%

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WASHINGTON — Sales of previously owned homes rose in September to the third highest level on record as low mortgage rates beckoned buyers.

The National Association of Realtors reported Monday that after two straight months of declines, sales rose 3.1 percent in September from the previous month to a seasonally adjusted annual rate of 6.75 million units, the third-highest showing ever.

The figures were better than analysts were expecting. They were forecasting sales of previously owned homes to clock in at around a 6.54 million pace for September.

Low mortgage rates have bolstered housing activity, and the housing market has been a bright spot for the economy — not only during the 2001 recession but also in its subsequent recovery. Economists expect home sales to set new record highs for all of 2004.

The average rate on a 30-year mortgage in September was 5.75 percent. That was down from 5.87 percent in August and 6.15 percent in September a year ago.

"The good news is that interest rates have been fairly stable over the last month, hovering near generational lows, and that is increasing the purchasing power of buyers trying to get into the housing market," said David Lereah, the association's chief economist.

The median price of a previously owned home — half sell for more and half sell for less — was $186,600 in September, up 8.6 percent from the same month last year.

The strong housing report helped minimize losses Monday on the stock market, which was battered by volatile crude oil prices.

While oil prices, which topped $55 per barrel for the first time last week, managed to fall somewhat Monday, many analysts believe they're still too high and will start to weigh heavily on the economy should they remain above $50. A barrel of light crude was quoted at $54.54, down 63 cents on the New York Mercantile Exchange, after rising as high as $55.67.

"For the first time, you're really starting to see companies mention oil in their earnings reports this quarter," said Chris Johnson, manager of quantitative analysis at Schaeffer's Investment Research in Cincinnati. "Up until now, high oil prices have been little more than a nuisance for investors. Now, it's shaping up to be a real problem."

The Dow Jones industrial average fell 7.82, or 0.08 percent, to 9,749.99, setting a fresh year-to-date low for the Dow in its lowest close since Nov. 24.

Broader stock indicators finished narrowly lower. The Standard & Poor's 500 index was down 0.94, or 0.09 percent, at 1,094.80, and the Nasdaq composite index lost 1.10, or 0.06 percent, at 1,914.04.