MARCH 2005

New Home Sales Set
Fourth Straight Annual Record in 2004

Statistics from the U.S. Commerce Department confirmed that sales of both new and existing homes set all-time records for the fourth straight year in 2004. New-home sales rose 8.9% to reach 1.83 million. The number of new homes listed for sale in December 2004 was 432,000, the highest level since August 1973. The median time-on-market was 4.2 months.

Most economists expect the housing market to plateau this year in response to rising mortgage interest rates. Doug Duncan, chief economist for the Mortgage Bankers Association, told the American Banker that "the housing market is still going to be strong this year, just not historically strong." Although the 30-year mortgage interest rate fell to a 3-month low (5.66 percent) at the end of January 2005, the National Association of Realtors expects it to rise during the remainder of the year to about 6.2 percent. That should be enough to moderate a market that has had economists concerned about a "housing price bubble" since 2002.