Local housing market still hot

By Christian Wihtol
The Register-Guard

Hunting for a house was a nail-biting experience in Lane County in August, as the metro area's housing market continued to sizzle, the latest home-sales data show.

The supply of homes for sale remained at a 2 1/2 -year low in August, homes that sold in August were on the market an average of just 45 days, and prices held well above the year-ago level, according to the monthly report from RMLS, the Portland-based firm that runs the multiple-listing service for the Lane County market.

The national market in August also was hot, courtesy of low mortgage rates. Nationwide, sales of newly constructed homes in August jumped 9.4 percent, the biggest gain since the end of 2000, propelled by the lowest mortgage rates in four months, Bloomberg News reported Monday.

``We are in the midst of, I would say, the biggest worldwide housing boom ever,'' said Robert Shiller, an economics professor at Yale University.

Nationally, sales of new single family homes increased to a 1.184 million annual pace last month, led by surging sales in the West and South, from a July rate that was slower than first estimated, the Commerce Department said in Washington, D.C.

Here's what that boom looked like in Lane County in August:

• There were 517 pending sales in the month, up 25 percent from a year earlier.

• Closed sales for the month totaled 494, up 7 percent from a year earlier.

• New listings stood at 641, up 9 percent from a year earlier.

• The average sales price for August was $187,400, up 6 percent from a year earlier.

• The median sales price - the price with the same number of sales above and below - was $162,500, up 3 percent from a year earlier.

• The inventory for August stood at 2.2 months - that is, the month's inventory would last just 2.2 months if sales continued at their current pace - up from 3.1 months in August 2003, and 4.3 months in August 2002.

Nationally, increased sales of new homes and a drop in the supply of homes may add to builder backlogs and underpin construction through year-end, contributing to growth in the world's largest economy, experts said. The average 30-year fixed rate mortgage fell to 5.87 percent in August, compared with the 7.63 percent average during the past 10 years, according to Freddie Mac, the second-biggest buyer of mortgages.

"We've seen consistently good sales" for a number of years, said Joel Rassman, chief financial officer of Toll Brothers Inc. "Every home we have is sold before it's built. This is a very strong market with demand so far greater than supply." Toll is the largest U.S. builder of luxury homes.

If Toll, based in Huntingdon Valley, Penn., didn't sell a single home for the next 30 days, it would still take 11 months to fill existing orders, he said.

"Not only do we have the rest of this year in the bag, but we have most of next year" as well, he said.

Economists forecast new sales at a 1.155 million annual rate last month after a previously reported 1.134 million annual pace in July, according the median of 51 economists surveyed by Bloomberg News.

About 1.16 million homes will be sold this year, according to a National Association of Realtors forecast, surpassing the record 1.085 million in 2003. Sales rose to a record annual pace of 1.283 million in May, government data show.

Sales of new homes increased in three of four regions. They rose 6.1 percent in the Northeast to 70,000 at an annual rate, 13 percent in the South to 536,000 and 20 percent in the West to 356,000. Sales fell 8.3 percent in the Midwest to a 222,000 pace.

U.S. Treasury notes rose as surging oil prices fueled concern the economy won't grow as quickly as Federal Reserve policy-makers expect. The 4 1/4 percent note due in 2014 rose 1/4 , pushing down the yield 3 basis points to 3.99 percent as of 3 p.m. in New York.

Housing is an issue in this year's presidential campaign, with President Bush touting record U.S. home ownership as a reason voters should give him four more years in office. Democratic challenger John Kerry said Bush hasn't done enough to ensure that housing is available and affordable.

The median selling price in the U.S. dropped to $208,900 from $214,400 in July, reflecting a greater percentage of homes built for less than $125,000, the Commerce Department said. Prices are 9.7 percent higher than they were at the same time last year.

``Housing markets won't turn on a dime,'' said Yale's Shiller, whose book ``Irrational Exuberance,'' published just before the 2001-02 stock market slide, warned that equities were overvalued.

"The general sense is, at least in the cities that have been booming for a while, it is slowing down."

The inventory of new homes for sale dropped to a 4.2-month supply in August from 4.4 months while the number of new homes for sale rose to 404,000, the highest since October 1979.