U.S. Home Sale Volume Sets Record

May 25, 2005 LOS ANGELES -- Existing-home sale volume reports for April indicate that the number of existing SFR (single family residence) and condominium purchases climbed by 4.5 percent and the median home price on a national basis is now $206,000.

The surge in sales percentages for home loans country-wide was greater than economists predicted. Furthermore, analysis shows that home sale percentages showed its largest gain in nearly 25 years.

Previously-owned SFR's and condo sales combined climbed to an annual rate of 7.18 million units last month when calculated on a seasonally adjusted basis. This figure overshadowed the previous record of 7.02 million set in June 2004. This informational news comes from reports from the National Association of Realtors.

The climb in median home sale prices rose 15.1% overall when congruently compared to last April's reports. We haven't seen this kind of an upward swing in median home prices since November 1980, at which point median pricing rose 15.6%.

In the background of happy homeowners who are selling across the U.S. right now there are economists and forecasters whispering about "housing bubble" worries. The reason is that home buyers have augmented the most common use of fixed-rate mortgages with a rapidly climbing number of interest-only home loans as well as other home finance programs which deviate from fixed interest rate home financing which has been dominant until lately on a grand scale.

Federal Reserve Chairman Alan Greenspan said last week that although there is a considerable bandwagon effect right now with regard to the home sale market he sees no "housing bubble" beneath the calm surface. This contrasts some economic predictive views, but nonetheless  most homeowners will listen to Mr. Greenspan simply based upon his seat, and the credentials that chair provides.

At present, housing inventory is relatively low when you look at things on a countrywide level. Simple "supply and demand" economic rules apply when inventory of available homes for open market sale become lean. Translated, it means that as long as there are less homes available for sale to people who want to buy, the more aggressive these home purchase candidates become when deciding to buy. Remember the Cabbage Patch Doll craze in the 1980's? The same rule applies, minus the ball bats parents used at department stores while fighting like mad in checkout lines. I maintain that as long as this simple concept remains a part of the home buying market, we will see no bubbling effect. However, homeowners should keep a close eye on their markets, because once home inventory begins to decline there could be a rapid misfire which will impact property values adversely on a national level.

Getting back to the record-setting amount of home sales recently: This surge was certainly most unexpected, even by the best mortgage forecast experts. When looking at this fact you must also consider the surprise across the board by economists regarding the staying-power of low interest rates this late into 2005. This surprise is hinged mainly on the fact that the Fed committed publicly at the end of last year that they will attempt to control lifting inflation by imposing "measured increases" in mortgage rates for home finance and refinance this year. The old adage, "never say never" seems to come to mind, doesn't it?

As mentioned in our home mortgage loan report, recent low home loan rates dropped even further to an average percentage of 5.71 last week. This came as a shock to many, as the figure indicates the largest, most significant drop in already low rates since February. This original, syndicated news article written by Nolan Voight, Mortgage Columnist. Email Nolan Voight with comments.