Storms help keep existing home sales strong

WASHINGTON – Sales of previously owned homes held steady in September at the second-highest level on record as demand was bolstered by hurricane refugees buying homes, a real estate trade group said Tuesday.

The National Association of Realtors said sales of existing homes last month were unchanged at a seasonally adjusted annual rate of 7.28 million, the same as August. The Realtors said sales would have fallen without the increased demand for houses because of the devastation from Hurricane Katrina.

The September performance was stronger than economists had been forecasting. They had expected sales to decline by 1.2 percent, reflecting a belief that rising mortgage rates will begin to cool off the booming housing market.

The median price of an existing home stood at $212,000 in September, up by 13.4 percent from September 2004. That was a slight slowing from the 15.6 percent price appreciation recorded in August from the same period a year ago.

In Maine, the median price in September was $194,600, which compares to $177,450 a year earlier.

David Sleeper of Realty of Maine in Bangor said the media’s focus on a potential real estate bubble bursting has prompted some homeowners to list their properties just in case prices start to fall.

Sleeper predicted, however, that the local market for homes will remain strong “as long as interest rates don’t get too out of hand.”

The Maine Real Estate Information System, a multiple listing service, said 1,510 homes were sold in the state in September, up from 1,376 during the same month last year, an increase of just under 10 percent.

Economists are predicting that rising mortgage rates will slow the pace of sales nationally and the rate of price appreciation in coming months. Rates for 30-year mortgages are now above 6 percent for the first time since last March.

Katrina had a major impact on sales in areas where it hit, the Realtors said. Sales plunged by 85 percent in New Orleans but were up 150 percent in nearby Baton Rouge.

“The nearby regions picked up a great deal of activity very quickly,” said David Lereah, chief economist for the Realtors.

Lereah said that Katrina lifted sales nationally from where they would have been had the hurricane not struck.

By region of the country, sales were up the most in the South – which bore the brunt of Katrina – for a gain of 3.7 percent.

Sales also rose by a smaller 0.8 percent in the Northeast but fell by 3 percent in the Midwest and 4.1 percent in the West.