Property ManagementNAR Hopes For FED Interest Rate Reduction Soon
National Association of Realtor leaders say that waning consumer confidence
is the cause of slower home sales in January. Although interest rates remain
relatively low, rates are creeping up again, notes NAR president Richard
Mendenhall, and home inventories are up almost 38 percent over last year.
Existing-home sales fell 6.6 percent to a seasonally adjusted annual rate of
4.65 million units in January from 4.98 million units in December. However,
last month"s sales activity was 2.4 percent above the 4.54-million unit pace in
January 2000, when interest rates were more than one and a half points higher.
Dr. David Lereah, NAR"s chief economist, said, "For two consecutive months
we"ve had big drops in existing home sales – this results from a decline in
consumer confidence and the deteriorating economy," he said. "Although home
sales remain strong in comparison with other sectors of the economy, we think
lower mortgage interest rates will keep the market from sinking into a serious
decline."
NAR President Richard A. Mendenhall noted, "Mortgage interest rates have
been edging up over the last two weeks, and the current average for a 30-year
fixed-rate mortgage is 7.12 percent," he said. "We may see a little
"fence-jumping" of people getting into the market before interest rates move
higher, but that would be temporary. What we need is continued aggressive
action by the Federal Reserve to lower interest rates and keep this important
sector of our economy moving and providing stimulus to other industries," he
added.
Housing inventory levels fell 1.4 percent at the end of January with 1.38
million existing homes available for sale, which represents a 3.6-month supply
at the current sales pace. However, inventory levels are 38.0 percent higher
than the record low of 1.00 million homes available in January 2000.