Despite rising mortgage rates, sales of previously owned homes rose to the second-highest level ever last year. A real estate trade group says housing activity will slow significantly this year.
The number of down payments on existing homes began dropping substantially last October, suggesting lower sales figures starting this quarter, the National Association of Realtors said Wednesday. Contract closings often trail initial deposits by several months.
“My guess is that we’ll see in February and March that something has gone haywire in the real estate industry,” Realtors President Edmund G. Woods Jr. told reporters at a briefing.
Existing-home sales totaled 3.97 million last year, up 4.3 percent from 1993’s 3.80 million and second only to 3.98 million in 1978, the real estate group said. All regions posted gains.
Sales also rose 1.8 percent in December, to a seasonally adjusted annual rate of 3.89 million from 3.82 million a month earlier.
“Those are the best numbers we’re going to see for a while,” predicted John A. Tuccillo, the organization’s chief economist.
Mortgage rates rose last year from less than 7 percent in February to more than 9 percent last month. An increase from 7 percent to 9 percent would add $209 to the monthly payment on a $150,000 mortgage.
The price of existing homes remained relatively stable last year. The median price was $107,700 last month, compared to $107,400 a year earlier. The median is the midpoint, meaning that half of the homes cost more and half cost less.
Regionally, the West posted the biggest sales gain last year, a 7.1 percent advance to 865,000, including a 2.4 percent gain in December to an 840,000 annual rate.
The Northeast had a 4.2 percent gain, to 595,000. Sales in December were unchanged from November at a 570,000 rate. In the South, sales rose 3.7 percent, to 1.47 million, including a 9 percent jump in December to a 1.46 million rate.
Sales were up 3.1 percent in the Midwest, to 1.04 million, although they fell 6.4 percent in December to a 1.02 million rate.