Home sales up 6% in December
Record 900,000 new homes sold in 2001 despite recession
By Rex Nutting, CBS.MarketWatch.com
Last Update: 10:04 AM ET Jan. 28, 2002
WASHINGTON (CBS.MW) - Sales of new homes jumped about 6 percent in December to an annual rate of 946,000, the highest level since March, the Commerce Department estimated Monday.
A record 900,000 new homes were sold in all of 2001, breaking the record of 886,000 set in 1998, the government agency estimated. Read the complete release.
Unseasonably warm weather in much of the nation in early December undoubtedly contributed to the strong monthly sales pace.
Housing fundamentals have remained healthy throughout the year, an oddity during recessions.
This recession was different, in part because household incomes haven't fallen as they usually do in recessions. Mortgage interest rates fell ahead of the recession to near-historic lows, keeping demand firm.
Although rates have backed up since November's lows, 30-year mortgages are still below 7 percent on average, a strong inducement to buy.
Of course, since housing never collapsed, it's not likely that investments in residences and the associated spending on durable goods will grow much in the coming months. This pent-up demand has typically been one of the strongest drivers of economic recoveries.
The Federal Reserve's policy-setting committee begins a two-day meeting on Tuesday.
Analysts are nearly unanimous in predicting that the Fed will leave rates unchanged. It would be the first time since December 2000 that the Federal Open Market Committee ended a meeting without cutting rates.
Sales were down modestly in the Northeast, Midwest and South and soared about 35 percent in the West. The number of unsold homes on the market remained constant at 308,000, where it's been for six months.
November's sales estimate was revised lower to 895,000 from an earlier estimate of 934,000.
Economists surveyed by CBS.MarketWatch.com were expecting a sales pace of about 924,000. See Economic Calendar and Forecast.
The median sales price of a new home rose 3 percent to $174,100 in 2001. The December median sales price of $170,200 was 5 percent higher than December 2000's median price.
The average sales price rose 2.4 percent in 2001 to $211,900. The average price in December rose to a record $225,400, up 8 percent from December 2000.
Rex Nutting is Washington bureau chief of CBS.MarketWatch.com.
