WASHINGTON -- Sales of existing homes in the United States unexpectedly rose in November for the first time in six months, enough to push the full year total over 4 million for the first time, a trade group reported yesterday.
"In 1997, housing will clearly be weaker than what we've seen in 1996," said Ram Bhagavatula, chief financial economist at Citicorp Securities Inc. in New York. "Income growth is slowing, the economy is slowing down, and mortgage applications are falling."
Home resales increased 1.8 percent in November to an annual rate of 4.04 million, according to the National Association of Realtors. The figures represent actual closings. Analysts had expected a 0.1 percent decline.
The Realtors predict 1996 resales will total a record 4.09 million, topping the previous high of 3.99 million recorded in 1978.
November's sales rebounded from October, when resales fell 1.5 percent to an annual rate of 3.97 million, as previously reported.
November's home resales were boosted by a decline in mortgage rates.
The average 30-year mortgage rate fell to as low as 7.52 percent in November after a recent peak of 8.34 percent in September.
Nationwide, 2.24 million homes were available for sale during the month.
At the November resales rate, that's a 6.6-month supply.
Also, the Realtors said the average price of a previously owned home rose 0.7 percent to $117,400 from $116,600 in October. The November resale price was 2.7 percent higher than the November 1995 price of $114,300.
Home resales are an important gauge of the health of the housing industry, since previously owned homes make up about 85 percent of all U.S. single-family home sales.
And mortgage interest rates play an important role in influencing the direction of sales.
Sales advanced earlier in the year as rates on traditional 30-year fixed-rate loans hovered near 7 percent.
However, the sales pace began to weaken in June as mortgage rates rose amid concerns the Federal Reserve would raise borrowing costs to cool the economy and guard against inflation.
The economy has since slowed on its own and the Fed, at its final policy meeting of the year Dec. 17, elected to refrain from altering a key interest rate target, the overnight bank lending rate.
Additionally, some analysts expect mortgage rates to remain near current levels in the new year because the economy isn't growing at a fast enough pace to cause inflation to accelerate.
Pub Date: 12/31/96