WASHINGTON - Existing homes were sold in April at the fastest pace in history as the nation's red-hot housing market just kept getting hotter.
The National Association of Realtors reported Tuesday that existing single-family homes and condominiums were sold at a seasonally adjusted rate of 7.18 million units last month, a gain of 4.5 percent from a revised March sales pace of 6.87 million units.
The strength in sales, which was attributed to further declines in mortgage rates, put new upward pressure on prices. The median cost rose to a record $206,000, up 15.1 percent over a year ago.
That represented the biggest 12-month gain in prices since November 1980 and added to concerns that the housing industry could be experiencing a speculative bubble similar to the stock market bubble that popped in the spring of 2000. The median is the mid-point where half the homes sold for more and half for less.
The jump in home prices raised worries in financial markets that the Federal Reserve might be compelled to boost interest rates at a more aggressive clip, given that the eight quarter-point rate hikes since last June have done nothing to cool off demand for housing.
Last week, Fed Chairman Alan Greenspan acknowledged concerns about "froth" in the housing market. "We don't perceive that there is a national bubble, but it's hard not to see that... there are a lot of local bubbles," he said in remarks to the Economic Club of New York.
It was Greenspan's most direct expression of concern about the huge run-up in home prices in recent years, especially in certain parts of the country.
Minutes released Tuesday from the May 3 meeting at which Fed policymakers raised rates most recently indicated they were concerned about high energy prices stoking broader inflation but didn't believe they needed to raise short-term interest rates more aggressively.
Tom Kunz, president of real estate giant Century 21, said he believed home sales would remain strong through most of this year because he did not expect mortgage rates to climb at a rapid clip. Rates have actually been falling in recent weeks with the 30-year mortgage dipping to 5.71 percent last week, according to a nationwide survey by Freddie Mac.
"We have a good market and money is still relatively cheap," Kunz said in an interview.
David Lereah, chief economist at the Realtors, said that while he had expected existing home sales to decline slightly from last year, when they set a record for a fourth straight year, it was possible sales could achieve a fifth annual record.
But Lereah said he agreed with Greenspan's assessment that while there was no national bubble in home prices, there were some areas of the country "where there could be some froth."
The new report said that the 7.18 million sales rate in April compared to a revised 6.87 million pace in March. The old record was 7.02 million at an annual rate last June.
The April increase included a 4.5 percent rise in sales of single-family homes to a record annual rate of 6.28 million units and a 4.8 percent increase in sales of condominiums, which also set a record at an annual rate of 899,000.
By region, sales were up 7 percent in the South, 5.8 percent in the Midwest and 4.3 percent in the Northeast. They were unchanged in the West last month.
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National Association of Realtors: http://www.realtor.org
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