Sagging consumer confidence sent existing-home sales lower in February both nationally and in California, while median home prices on both fronts continued to rise, according to trade group reports.
But analysts said the nation's housing market as a whole is still strong--bolstered in part by falling mortgage interest rates. Economists hope strong demand in the housing sector will continue to shore up the country's ailing economy.
In California, closed-escrow sales of existing homes were a seasonally adjusted annualized rate of 486,370 in February, down 13.3% from 560,700 for the same period a year earlier, according to the California Assn. of Realtors and Real Estate Solutions, a real estate information service.
The drop in sales can be attributed to a slight pullback by consumers and to the fact that 2000 was a record sales year.
"A year ago, we had an unbelievably strong market, so this is to be expected," said Leslie Appleton-Young, CAR's vice president and chief economist. "But we still have too many people chasing too few properties."
This high demand pushed median home prices in the state to $245,560 in February, an 8.1% gain from $227,160 for the same period a year earlier, CAR said. Meanwhile, national sales of existing homes fell to a seasonally adjusted annualized rate of 5.18 million in February, down 2.63% from 5.32 million homes sold in February 2000, according to the National Assn. of Realtors.
Median home prices in the U.S. rose to $138,800, up 3.8% from $133,700 in February 2000, NAR said.
"In the midst of all the economic mess, housing is putting in a remarkable performance," said David Seiders, chief economist at the National Assn. of Home Builders.
Analysts attributed the continued strength to declining mortgage rates. The drop in 30-year fixed-rate mortgages since a peak in May 2000 means that an additional 300,000 households can now qualify to buy a typical home, said David Lereah, chief economist for NAR.
"Although the slowing economy is causing a little drag on the market," Lereah said, "consumers who are confident about their own future are going ahead with big-ticket purchases like homes and cars."
According to a nationwide weekly survey of rates, 30-year fixed-rate mortgages dropped to 6.89% last week, significantly below the peak of 8.64% hit in May.
In that month, the Federal Reserve pushed up short-term interest rates for a sixth time in an effort to slow an economy that at the time was growing at a sizzling pace.
However, with economic growth slowing dramatically at the end of last year, the Fed switched course. The Fed has now cut interest rates three times since Jan. 3, reducing them at the fastest pace in 16 years.