Home Sales*

Sale of new single-family homes totaled 1,044,000 units at a seasonally adjusted annual rate (SAAR) in the fourth quarter of 2002, up a statistically insignificant 2 percent from the previous quarter and up 13 percent from the fourth quarter of 2001. The number of new homes for sale at the end of December 2002 was 338,000 units, up a statistically insignificant 2 percent from the past quarter and up 10 percent from the fourth quarter of 2001. At the end of December inventories represented a 3.8 months’ supply at the current sales rate, unchanged from the end of the previous quarter but up a statistically insignificant 3 percent from the fourth quarter of last year.

There were 976,000 new homes sold in 2002, a 7-percent increase from 2001. The inventory of new houses for sale at the end of 2002 was 341,000, up 10 percent over the past year.

Sales of existing single-family homes for the fourth quarter of 2002 reported by the NATIONAL ASSOCIATION OF REALTORS^® totaled 5,730,000 (SAAR), up 7 percent from the third quarter of 2002 and up 9 percent from the fourth quarter of 2001. The number of units for sale at the end of the fourth quarter of 2002 was 2,060,000, 10 percent below the previous quarter but 12 percent above the fourth quarter of 2001. At the end of the fourth quarter a 4.2 months’ supply of units remained, 18 percent less than the previous quarter but unchanged from the fourth quarter a year ago.

In 2002 sales of existing single-family homes rose to 5,563,000, up 5 percent over the past year.

Home Prices

The median price of new homes during the fourth quarter of 2002 increased to $179,700, up a statistically insignificant 1 percent from the previous quarter and up 5 percent from the fourth quarter of 2001. The average price of new homes sold during the fourth quarter of 2002 was $228,200, up 4 percent from the third quarter of 2002 and up 7 percent from the fourth quarter a year ago. The price adjusted to represent a constant-quality house was $210,200, up a statistically insignificant 2 percent from the third quarter of 2002 and up 5 percent from the fourth quarter a year ago. The values for the set of physical characteristics used for the constant-quality house are based on 1996 sales.

The annual median price of new homes in 2002 increased $185,200, up 6 percent from 2001. The annual average price was $226,700, also an increase of 6 percent from the past year.

The median price of existing single-family homes in the fourth quarter of 2002 was $161,600, unchanged from the third quarter of 2002 but 9 percent above the fourth quarter a year ago, according to the NATIONAL ASSOCIATION OF REALTORSÆ. The average price of existing homes, $203,300, decreased 1 percent from the previous quarter but was 10 percent greater than in the fourth quarter of 2001.

The annual median price of existing homes increased 7 percent to $158,300 in 2002 while the average price rose to $201,700, a 9-percent gain over the previous year.

Housing Affordability

Housing affordability is the ratio of median family income to the income needed to purchase the medianpriced home based on current interest rates and underwriting standards, expressed as an index. The NATIONAL ASSOCIATION OF REALTORS^® composite index value for the fourth quarter of 2002 shows that families earning the median income have 140.7 percent of the income needed to purchase the median-priced existing home. This figure is up 4 percent from the third-quarter 2002 index but unchanged from the fourth quarter of 2001.

The fourth-quarter increase in the housing affordability index is the result of changes in the marketplace. The national average home mortgage interest rate for existing single-family homes has decreased 30 basis points from the previous quarter to an interest rate of 6.11 percent. The median price of existing single-family homes increased to $161,600, a gain of 0.1 percent from the third quarter of 2002, and rose 8.8 percent from the fourth quarter of 2001. The median family income rose just 0.5 percent from the previous quarter and 2.0 percent from last year’s fourth quarter.

The fixed-rate index increased 4 percent from the third-quarter 2002 index but decreased 1 percent from the fourth quarter of 2001.

The annual composite index decreased 0.3 percentage point from 2001 to 2002 to 137.3, and the fixed-rate index declined 1 percent over the year.

Apartment Absorptions

There were 61,700 new, unsubsidized, unfurnished, multifamily (5 or more units in structure) rental apartments completed in the third quarter of 2002, up a statistically insignificant 9 percent from the previous quarter and up a statistically insignificant 9 percent from the third quarter of 2001. Of the apartments completed in the third quarter of 2002, 57 percent were rented within 3 months. This absorption rate is 10 percent below the previous quarter and 11 percent below the same quarter of the previous year. The median asking rent for apartments completed in the third quarter was $910, which is a statistically insignificant 3 percent below the previous quarter but a statistically insignificant 1 percent above a year earlier.

Manufactured (Mobile) Home Placements

Manufactured homes placed onsite ready for occupancy in the third quarter of 2002 totaled 166,000 at a seasonally adjusted annual rate, a statistically insignificant 9 percent below the level of the previous quarter and 15 percent below the third quarter of 2001. The number of homes for sale on dealers’ lots at the end of the third quarter totaled 56,000 units, 5 percent below the previous quarter and 5 percent below the same quarter of 2001. The average sales price of units sold in the third quarter was $52,100, a statistically insignificant 3 percent above the previous quarter and 9 percent above the third-quarter 2001 price.

Builders' Views of Housing Market Activity

The National Association of Home Builders™ (NAHB) conducts a monthly survey focusing on builders’ views of the level of sales activity and their expectations for the near future. NAHB uses these survey responses to construct indexes of housing market activity. (The index values range from 0 to 100.) The fourth-quarter 2002 value for the index of current market activity for single-family detached houses stood at 71, up 7 points from the third quarter and up 16 points from 2001’s fourth quarter. The index for future sales expectations, 69, was unchanged from the third-quarter value but up 11 points from 2001’s level. Prospective buyer traffic had an index value of 48, which is up 1 point from the third-quarter value and up 9 points from 2001’s fourth-quarter level. NAHB combines these separate indexes into a single housing market index that mirrors the three components quite closely. In the fourth quarter, this index stood at 64, which is up 4 points from the third-quarter level and up 13 points from the value in 2001.

In 2002 the current activity and expected sales components averaged 66 and 69, respectively, each 5 points above the average in the previous year. The prospective buyer traffic component averaged 46, 6 points higher than in 2001. The average composite index was 61, 5 points above a year earlier.