1998 Home Sales Set A Record

Sales of existing homes soared 13.5 percent in 1998 to 4.78 million, riding low mortgage rates and American prosperity to the best year on record.

Sales easily surpassed the previous record, 4.21 million, set the previous year, the National Association of Realtors said Monday. The group began tracking sales in 1968.

In December, sales rose 3.1 percent from the month before to a seasonally adjusted annual rate of 5.03 million, also a record.

Strong buying demand pushed the inventory of homes for sale, 1.58 million, to a record low level, a 3.8 month supply at the December sales rate.

"Continuous low interest rates and the healthy economy have created a steady flow of buyers moving up to second and third homes, and they feel comfortable doing so because there are so many first-time buyers in a solid position to buy," said Realtors President Sharon A. Millett.

Interest rates on 30-year, fixed-rate mortgages have remained below 7 percent since mid-June, the longest stretch at such a low level in three decades.

Also, last year's unemployment rate, at 4.5 percent, was the lowest in 29 years. Plus, strong stock market gains have supplied many well-off Americans with the werewithal to buy a larger home or vacation house.

Economists expect home sales to remain strong this year, though at something less than 1998's record.

The strong sale propelled a healthy increase in the value of many homes. The median price of an existing home last year, meaning half sold for more and half for less, was $130,600, up 5.2 percent from 1997.

By region, sales in December were strongest in the West, up 4.9 percent to an annual rate of 1.07 million. In the Midwest, sales increased 4.8 percent to a rate of 1.30 million units; in the Northeast, 3 percent to a rate of 690,000, and, in the South, 1 percent to 1.97 million units.

Written By Dave Skidmore