1999 Sales Still Going Strong

The nation's top housing leaders are continuing to see very healthy numbers as 1999 starts drawing to a close, believing the year almost certainly will exceed the sales records of 1998 and set the stage for a strong Year 2000.

The latest figures from the National Association of REALTORS® suggest the year will end with about 5.2 million homes being sold, up from last year's record of 4.97 million homes sold. Also, the median price of an American home has now topped $137,000 -- well above year-ago numbers.

The Realtors said home sales are coming off their all time highs recorded earlier this year but sales are still brisk. In August, sales dropped by 2.8 percent -- but remainded 9.2 percent ahead of the August 1998 rate.

NAR President Sharon Millett attributed the drop to normal seasonal declines after the big, early-spring home buying season.

The National Association of Home Builders is agreeing that 1999 almost certainly will be a record year. The builders note that their "housing index" -- which gauges affordability -- came in at 73 last month, higher than the previous two months but below July's high of 74.

Some builders remain concerned that rising interest rates will affect buyer demand, the NAHB said. "However, the fact that rates have come down a bit since this time last month is a good sign," Charlie Ruma, NAHB president, said in a statement.

Interest Rates Stable, May Turn Down

The chief economist for the National Association of Realtors believes current interest rates -- hovering in the 7.75 percent range -- has probably closed some buyers out of the market for now, but he continues to forecast rates in the 6.5 percent range by the end of the year, which could trigger another round of brisk home sales.

According to Dr. James F. Smith, "Even through last month's increase in interest rates may slow the economy a bit, the increase will not derail this market. The economy looks good, demand for housing remains strong, and housing affordability conditions are expected to remain healthy through the end of the year."

Economists at Freddie Mac, however, are less optimistic, seeing rates hanging above 7 percent well into 2000.

For more interest rate news, check out the Realty Times Interest Rate Watch

Group Hopes to Wire The Future

A New York-based group of 15 technology, publishing and home development companies has organized a group called "Wiring America's Homes" in an effort to devise an industry standard for making new homes compatible with the future.

The group is being lead by IBM, Lucent Technologies and Intel.

The organization hopes to establish industry standards for making sure new homes are adequately wired to access the Internet, handle security concerns and even heating, air conditioning and lighting issues.

The organization hopes a basic package can be developed for less than $2,000. It believes by the year 2004 more than 45 percent of all single family homes will want whole-housing wiring systems.

More Downpayment Assistance Needed

Assistance with down payments would put more people into a modestly priced home than lowered interest rates or closing costs finds a new report by the Census Bureau. And, one in ten potential home buyers could have qualified for a mortgage with no help at all.

The report reveals that if renters received a down-payment subsidy of $5,000, about 2 in 10, or 8.9 million renters would have been able to afford a modestly priced house. A $10,000 subsidy would have increased the proportion of renters who would qualify for a mortgage to 3 in 10, or 13.4 million renters.

Reducing interest rates by 3 percentage points would have increased the proportion of renters who would have qualified for a mortgage from about 10 percent to about 11 percent. Requiring no down payment would have increased the proportion of qualified renters to about 13 percent.

Published: September 29, 1999

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