Washington, March 25 (Bloomberg) -- Americans, undeterred by the nation's preparation for war and encouraged by record-low mortgage rates, bought previously owned homes in February at the fourth-highest pace ever. Existing homes sold at an annual clip of 5.84 million units last month, down 4.3 percent from a record 6.1 million in January, the National Association of Realtors said. The only higher sales rates were 5.96 million in January 2002 and 5.91 million in December. The lowest mortgage rates since the John F. Kennedy administration will probably buoy house sales this year, economists said. Because home sales are counted when the transactions are completed, the totals reflect purchases arranged in previous months, before heavy February snowfalls discouraged shopping, consumer confidence reached decade lows and the unemployment rate rose to 5.8 percent.
``Generally strong sales are expected this year, assuming the war in Iraq is not prolonged,'' said David Lereah, chief economist for the Realtors association. At the same time, he said, ``the fragile economy combined with geopolitical concerns clouds the outlook,'' and the snowstorms of last month will probably reduce March sales. Economists had forecast that sales of existing homes would decline to a 5.8 million annual rate from the initially reported 6.09 million, based on the median of 52 forecasts in a Bloomberg News survey. Estimates ranged from 5.5 million to 6 million.
New-Home Sales
New-home sales, which are recorded when a contract is signed, probably rose in February to 925,000 from January's 914,000, based on the median of 52 estimates in a Bloomberg News survey of economists. The Commerce Department is to issue the report at 10 a.m. tomorrow. The supply of existing homes available for sale, another gauge of housing demand, fell to 4.4 months' worth in February from 4.5 months in January. A separate report by the Conference Board, a New York research group, showed that the percentage of consumers who said they plan to buy a new or existing home within the next six months fell to 3.2 in March from 3.8 in February. The group's index of consumer confidence fell to 62.5 this month, the lowest in almost a decade, from 64.8 in February. The median price of an existing home rose 0.9 percent in February to $161,600 from $160,200 the previous month. The price was up 8.2 percent from a year earlier. In the Midwest, sales rose 4.8 percent to an annual rate of 1.3 million. In the South, sales decreased 8 percent to a pace of 2.3 million. Resales in the Northeast dropped 2.9 percent to a 680,000 annual clip, and in the West they declined 6 percent to a 1.56 million annual rate.
Mortgage Rates
U.S. rates on 30-year fixed mortgages rose last week from a record low of 5.61 percent as war with Iraq moved closer, according to Freddie Mac, the No. 2 buyer of mortgages. The increase in the average mortgage rate to 5.79 percent was the first in nine weeks. ``We do see a cooling in the housing market in the second half,'' said Lereah, the Realtors economist. He estimates that house sales will ease to 5.5 million this year from last year's record 5.57 million. The association expects the 30-year fixed mortgage rate to reach 6.5 percent to 6.6 percent by the end of the year, Lereah said. Those rates and the strength of the housing market may hinge on how successful the U.S. war with Iraq is, he said. ``If confidence is shattered, all sectors of the economy will be hurt,'' he said. //www.quote.bloomberg.com