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Will The Housing Market Ever Reach It's Peak? From: The Wall Street Journal and Massachusetts Association of Realtors
Helped by low mortgage rates, sales of new homes in March surged 4.2% to a seasonally adjusted annual pace of 1.02 million units, an all-time high, the Commerce Department said. Meanwhile, the National Association of Realtors said sales of pre-existing homes jumped 4.8% to a seasonally adjusted annual rate of 5.44 million units, just shy of the all-time record high of 5.45 million units in June 1999. Taken together, total home sales reached a record annual pace of 6.46 million units, beating the previous record of 6.40 million units in June 1999. The average selling price for pre-existing homes on the South Shore rose 9.1% this first quarter of 2001 compared to the first quarter of 2000. The average number of homes sold during this time also increased 6.8%! Some economists, noting that home sales far exceeded expectations last month, said the strength of the housing market is evidence the Federal Reserve's campaign to boost economic activity by lowering interst rates is working--at least for some sectors of the economy. The new data show that "the underlying economy is basically healthy, despite concerns that" some industries are operating in or near recession levels, said Sung Won Sohn, chief economist at Wells Fargo & Co. in Minneapolis. In addition to low mortgage rates, home sales are benefiting from changing investment trends. After losing money in the stock market for more than a year, investors appear to be shifting more money into real estate, which has continued to appreciate.
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