DEMOGRAPHICS AND DEFLATION:

Sales of Existing Homes Surge to a Record High: The year-over-year increase in November is 13.2%, with the median price rising 10.4%. (Roger Vincent, December 30, 2004, LA Times)

Sales of previously owned homes in the U.S. climbed to a record high in November as low interest rates and a rising economy kept pulling buyers into the market.

Existing-home sales rose 13.2% from a year earlier to a 6.94-million annual rate, the National Assn. of Realtors reported Wednesday. The previous high was 6.92 million in June. Buyers paid more too: The median price rose 10.4% to $188,200.

November sales in the West increased 16.6%, the most of any region. Every region showed gains year over year, although sales in the Northeast slipped 1.3% from October to November. [...]

Several factors are keeping the market bubbling, including low mortgage rates.

"Mortgage interest rates dropped a quarter of a percentage point in late summer and then stabilized," said David Lereah, chief economist for the Washington-based real estate trade group. "Coupled with a growing labor market and a rising economy, this created optimal conditions for the housing sector."

Fixed 30-year mortgage rates averaged 5.72% last week, up from 5.69% the previous week, the Mortgage Bankers Assn. said Wednesday. That helped send mortgage application activity down 1.7%.

Mortgage rates are still relatively low on a historical basis and are at the same level as a year ago. When they finally start a widely predicted rise, the market will slow, said Keitaro Matsuda, senior economist at Union Bank of California, but for now "it seems to be relatively healthy, going strong."

Note both the Feds loss of control over mortgage rates and that the only decline occurred in the only place in the country that has a state losing population.

Posted by Orrin Judd at December 30, 2004 9:16 AM