WASHINGTON -- Home buyers, motivated by low mortgage rates and an improved job climate, propelled sales of previously owned homes in March to the second-best month on record.
The National Association of Realtors reported Tuesday that sales of existing homes clocked in at a seasonally adjusted annual rate of 6.48 million last month, representing a 5.7 percent increase from February.
March's sales pace was second only to the all-time monthly high rate of 6.68 million registered in September 2003.
The performance surpassed economists' expectations. They were forecasting sales to rise to a rate of around 6.20 million.
The figures on sales of existing homes come one day after the government reported that sales of new homes were strong in March. New-home sales jumped by 8.9 percent last month to a seasonally adjusted annual rate of 1.23 million units, the Commerce Department reported Monday. The increase was the largest in nine months.
Federal Reserve Chairman Alan Greenspan, appearing on Capitol Hill last week, said that the economic recovery was moving ahead smartly and called March a good month: Retail sales were brisk, the economy added a net 308,000 jobs - the most in four years - and factories saw demand for big-ticket goods jump.
The home sales figures, along with the other good economic data for March, means that the first three months of 2004 ended on a strong note, economists said. Some economists are forecasting growth in the first quarter at a rate of around 4.5 percent to 5 percent. The government releases figures on first-quarter gross domestic product Thursday.
Low mortgage rates have been powering home sales. The nationwide monthly average for a 30-year, fixed-rate mortgage in March was 5.45 percent, the second lowest monthly average on record, according to figures supplied by Freddie Mac, the mortgage giant. The lowest-ever monthly average was 5.23 percent in June 2003.
Mortgage rates, however, have been on the rise recently as increasing signs that the recovery is gaining momentum have pushed bond rates up.
David Lereah, the National Association of Realtors' chief economist, believes that home sales will remain healthy even as mortgage rates move higher. Expectations that the job market will continue to get better should help support home sales, he said.
"The figures look good as long as interest rates don't go through the roof," Lereah said. He's not expecting that to happen, however, and is predicting rates on 30-year mortgages to rise to around 6.5 percent by the end of this year.
By region, sales of previously owned homes in the West rose 10.2 percent in March from February to a rate of 1.83 million. In the Midwest, sales increased 6.3 percent to a pace of 1.35 million, and in the South, they were up 3.6 percent to a rate of 2.58 million. In the Northeast, however, sales held steady at a rate of 720,000, unchanged from February.