Existing single-family home sales rose strongly in March to the second-highest level on record, according to the NATIONAL ASSOCIATION OF REALTORS®.

Existing-home sales increased 5.7 percent to a seasonally adjusted annual rate* of 6.48 million units in March from an upwardly revised pace of 6.13 million units in February. Last month's sales activity was 12.7 percent above the 5.75 million unit level in March 2003; the record is 6.68 million in September 2003.

David Lereah, NAR's chief economist, said low interest rates get most of the credit for last month's performance, but he noted interest rates are now rising modestly. "The housing needs of a growing population timed nicely with historically low mortgage interest rates and a rebounding economy in March," Lereah says. "Although interest rates are rising modestly, an improving job market is creating a favorable backdrop for home sales, but at a somewhat slower pace in the months ahead."

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.45 percent in March, the second lowest on record, down from 5.64 percent in February. It was 5.75 percent in March 2003; the record low is 5.23 percent set in June 2003. Freddie Mac started tracking interest rates in 1971.

NAR President Walt McDonald, broker-owner of Walt McDonald Real Estate in Riverside, Calif., said interest rates should trend steadily upward. "The 30-year fixed mortgage interest rate should climb to 6.4 in the fourth quarter," he said. "However, since mortgage interest rates are still low in historic terms, the strength of the labor market has become an important factor in the health of housing and overall home sales this year should be close to a record."

The national median existing-home price was $174,100 in March, up 7.4 percent from March 2003 when the median price was $162,100. The median is a typical market price where half of the homes sell for more and half sell for less.

Housing inventory levels at the end of March rose 4.8 percent from February to a total of 2.39 million existing homes available for sale, which represents a 4.4-month supply at the current sales pace. Regionally, home resales in the West jumped 10.2 percent in March to an annual rate of 1.83 million units, and were 18.1 percent above a year ago. The median existing-home price in the West was $244,500, up 11.2 percent from March 2003.

Existing-home sales in the Midwest rose 6.3 percent in March to an annual rate of 1.35 million units, and were 7.1 percent above March 2003. The median price in the Midwest was $140,200, up 2.0 percent from the same month a year earlier.

The existing-home sales pace in the South increased 3.6 percent in March to an annual rate of 2.58 million units, and was 12.2 percent above a year ago. The median price of an existing home in the South was $158,700, which was 5.1 percent higher than March 2003.

Existing-home sales in the Northeast were at an annual pace of 720,000 units in March, unchanged from February, but were 10.8 percent above March 2003. The median existing-home price in the Northeast was $213,000, up 20.3 percent from the same month a year earlier.

*The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns.

Published: April 28, 2004

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