Thursday, June 26, 2003

Home sales increase

By Jeff McKinney
The Cincinnati Enquirer

[IMAGE] Crews finish work on houses in the Summerlin subdivision, Liberty Township.
(Michael Snyder photo)
Historic low interest rates continued to help sustain home sales in Greater Cincinnati in May, raising possibilities again that the area will set a sales record this year.

The number of single-family homes sold in Southwest Ohio, Northern Kentucky and southeastern Indiana rose 3.4 percent last month, to 2,951 from 2,855 last May, according to local boards of Realtors.

In Southwest Ohio, sales of existing homes in Hamilton, Butler, Warren and Clermont counties came in at 2,335, up 5.47 percent from the 2,214 in May 2002. The number sold last month also was the best-ever sales for the month of May.

The gain in May marked the third month out of five this year that sales set a record, despite a sluggish economy and soft stock market that have hurt other sectors.

The May increase also raised hopes that the local housing market could get back on track this year for another record-setting sales year. Sales of 11,351 homes so far this year are 1.1 percent below the 11,476 in the first five months of last year.

"We could have another record year if interest rates remain low, unemployment does not increase and consumer confidence continues to rise," Kathy Overstreet, president of the Cincinnati Area Board of Realtors, said.

Sales for the Tristate again were helped by low rates, something that's been fueling the nation's housing market for the past two years as borrowing costs have drastically dropped.

Local rates for a 30-year, fixed-rate mortgage averaged 5.64 percent last month, versus 6.41 percent in May 2002, according to the Cincinnati Area Board of Realtors.

Sales of homes priced between $50,000 and $250,000 in Southwest Ohio in May made up about 79 percent of the total sales for the four-county region. Sales in Southwest Ohio make up about 80 percent of the Tristate's total.

"Home affordability has never been greater," Overstreet said. "First-time buyers are entering the market at record levels because the lower rates mean they can own a house for virtually the same monthly payment they pay for rent, sometimes even less than their rent payment."

Nationally, last month, sales jumped 1.2 percent to a 5.92 million annual rate in May from 5.85 million rate in April, according to the National Association of Realtors. Sales last month were up 4 percent from the 5.67 million pace last May.

David Lereah, the NAR's chief economist, who earlier predicted that sales for this year would not break last year's record sales, appears to be revising his forecast because of the historic low mortgage rates.

"The pace of home sales so far this year has been higher than projected, and we still expect sales activity to ease a little but to end this year with a new annual record," he said.

Meanwhile, new-home sales skyrocketed by 12.5 percent in May from April to a seasonally adjusted annual rate of 1.16 million, the best month ever and better than the previous all-time high sales level set in September, the department said in a second report. New-home sales were stronger than economists were predicting.


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