Home Sales*

Sales of new single-family homes totaled 997,000 units at a seasonally adjusted annual rate (SAAR) in the third quarter of 2002, up a statistically insignificant 5 percent from the previous quarter and up 15 percent from the third quarter of 2001. The number of new homes for sale at the end of September 2002 was 332,000 units, up a statistically insignificant 1 percent from the past quarter and up 7 percent from the third quarter of 2001. At the end of September, inventories represented 4.0 months’ supply at the current sales rate, down a statistically insignificant 5 percent from the end of the previous quarter and down 9 percent from the third quarter of last year.

Sales of existing single-family homes for the third quarter of 2002 reported by the NATIONAL ASSOCIATION OF REALTORS^® totaled 5,357,000 (SAAR), down 3 percent from the second quarter of 2002 but up 2 percent from the third quarter of 2001. The number of units for sale at the end of the third quarter of 2002 was 2,350,000, 4 percent above the previous quarter and 8 percent above the third quarter of 2001. At the end of the third quarter, 5.2 months’ supply of units remained, 2 percent less than the previous quarter but unchanged from the third quarter a year ago.

Home Prices

The median price of new homes during the third quarter of 2002 decreased to $175,200, down 6 percent from the previous quarter, but increased a statistically insignificant 2 percent from the third quarter of 2001. The average price of new homes sold during third quarter of 2002 was $218,200, down 4 percent from the second quarter of 2002 but up 5 percent from the third quarter a year ago. The price adjusted to represent a constant-quality house was $206,200, unchanged from the second quarter of 2002 but up 4 percent from the third quarter a year ago. The values for the set of physical characteristics used for the constant-quality house are based on 1996 sales.

The median price of existing single-family homes in the third quarter of 2002 was $161,800, 3 percent higher than the second quarter of 2002 and 7 percent above the same quarter a year ago, according to the NATIONAL ASSOCIATION OF REALTORS^®. The average price of existing homes, $205,600, increased 2 percent from the previous quarter and was 8 percent greater than in the third quarter of 2001.

Housing Affordability

Housing affordability is the ratio of median family income to the income needed to purchase the median-priced home based on current interest rates and underwriting standards, expressed as an index. The NATIONAL ASSOCIATION OF REALTORS^® composite index value for the third quarter of 2002 shows that families earning the median income have 135.5 percent of the income needed to purchase the median-priced existing home. This figure is up 2 percent from the second-quarter 2002 index and up 2 percent from the third quarter of 2001.

The third-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 42 basis points from the previous quarter to an interest rate of 6.41 percent. The median price of existing single-family homes increased 2.5 percent from the second quarter of 2002 and rose 7.2 percent from the third quarter of 2001. The median family income rose just 0.5 percent from the previous quarter and 2.1 percent from last year’s third quarter.

The fixed-rate index increased 2 percent from the second-quarter 2002 index and increased 1 percent from the third quarter of 2001.

Apartment Absorptions

There were 57,500 new, unsubsidized, unfurnished, multifamily (5 or more units in structure) rental apartments completed in the second quarter of 2002, up 52 percent from the previous quarter and up 25 percent from the second quarter of 2001. Of the apartments completed in the second quarter of 2002, 62 percent were rented within 3 months. This absorption rate is a statistically insignificant 3 percent above the previous quarter but a statistically insignificant 5 percent below the same quarter of the previous year. The median asking rent for apartments completed in the second quarter was $952, which is a statistically insignificant 5 percent above the previous quarter and 9 percent above a year earlier.

Manufactured (Mobile) Home Placements

Manufactured homes placed onsite ready for occupancy in the second quarter of 2002 totaled 184,000 at a seasonally adjusted annual rate, a statistically insignificant 7 percent above the level of the previous quarter but a statistically insignificant 3 percent below the second quarter of 2001. The number of homes for sale on dealers’ lots at the end of the second quarter totaled 59,000 units, 8 percent below the previous quarter but a statistically insignificant 2 percent above the same quarter of 2001. The average sales price of units sold in the second quarter was $50,700, unchanged from the previous quarter but 4 percent above the second-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 third-quarter value for the index of current market activity for single-family detached houses stood at 64, down 1 point from the second quarter but up 1 point from 2001’s third quarter. The index for future sales expectations, 69, was unchanged from the second-quarter value but was up 4 points from 2001’s level. Prospective buyer traffic had an index value of 47, up 3 points from the second-quarter value and up 6 points from 2001’s third-quarter level. NAHB combines these separate indexes into a single housing market index that mirrors the three components quite closely. In the third quarter, this index stood at 60, unchanged from the second-quarter level but up 3 points from the value in 2001.