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Median Home Price Hits New High

California surpasses $400,000 in August, and sales also set a record. Analysts say results may signal a peak in activity.

September 26, 2003|Jesus Sanchez | Times Staff Writer

The nation's housing market remained red hot in August as sales and prices hit new highs. The median price of an existing single-family home in California broke through the $400,000 barrier for the first time, according to reports Thursday from real estate broker associations.

Analysts said the strong results may signal a peak in housing activity because even though mortgage rates have settled in recent weeks, they are not expected to go below the record lows achieved in July.

The average rate on a 30-year fixed-rate mortgage fell last week to 5.98%, dropping below 6% for the first time in nine weeks, the mortgage giant Freddie Mac said Thursday in its weekly survey.

In fact, the rise in home loan rates during the summer may have prompted many people to jump into the market before the rates went higher, driving sales higher, brokers said.

In California, the median price of an existing, detached single-family home sold in August hit a record monthly high of $404,870, up 5.6% from the previous month, according to the California Assn. of Realtors. August's price represents a whopping 21.1% gain over year-ago figures.

The sales pace also hit a record high in August, with closed escrow sales growing 8.4% from the previous month to a seasonally adjusted annual rate of 645,720 homes. The data, based on reports from 90 local Realtor associations, are different from those reported earlier in the month by DataQuick Information Systems, which compiles the figures from property records. Both sets of data show similar patterns, however.

"All regions of the state recorded a marked increase in sales activity last month," said Leslie Appelton-Young, California Assn. of Realtors' chief economist.

Nationwide, sales of existing, detached homes in August rose 5.5% from the previous month's revised level to a seasonally adjusted annual rate of 6.47 million homes, according to the National Assn. of Realtors. That is more than 21% above year-ago figures and is the second consecutive month of record sales.

The national median existing-home price in August rose 9.8% from year-ago levels to $177,500. The median price is the point at which half of the homes in a given market sell for more and the other half for less.

"Some of the home sales closed in August were negotiated in June when mortgage interest rates hit record lows," said National Assn. of Realtors Chief Economist David Lereah. "Much of the remaining portion of sales reflect quick decisions to make offers in July when interest rates began to rise sharply. The good news is that mortgage interest rates have declined over the last couple weeks."

In a separate report, the U.S. Commerce Department said that new-home sales rose 3.4% from July's revised results to a seasonally adjusted annual rate of 1.11 million. The median sales price, which is not seasonally adjusted, rose 3.1% from the same month last year to $184,500, according to preliminary figures.

Housing sales and prices are expected to moderate in the months ahead, but low mortgage rates should help keep the housing market healthy, industry analysts said.

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