Rate drops spur home resales in 35 states

Bloomberg News Service

Spurred by falling mortgage rates, sales of existing homes will rise in 35 states this year, and prices will increase in 110 of 113 metropolitan areas, the National Association of Realtors said.

"Some deceleration is expected for the remainder of the year in the wake of the Sept. 11 attacks, but sales remain historically strong," said David Lereah, the Washington-based trade group's chief economist, in a statement.

Honolulu is one of only two metropolitan areas expected to see a price decline, the group said, by 1.8 percent.

Prices are expected to fall 0.3 percent in Hartford, Conn. Prices in Springfield, Ill., are expected to be unchanged.

Nevada will post the largest increase in homes sold, 25 percent over last year, followed by Alaska, up 23 percent, and New Mexico, up 21 percent.

Sacramento, Calif., will post the biggest price increase, 18 percent, to $170,200, followed by a 12 percent gain in Washington. South Bend and Mishawaka, Ind., also will see a 12 percent increase.

The housing market is benefiting from a drop in interest rates even as economic growth slows. Rates on a 30-year mortgage have averaged 7.01 percent this year, down from 8.05 percent in 2000, according to mortgage buyer Freddie Mac.

The National Association of Realtors said last month it expected home sales to rise 1.3 percent this year and prices to increase 5.8 percent, compared with a 4.3 percent gain in 2000.

Sales will decrease or remain at last year's levels in 14 states and the District of Columbia.

The Honolulu Board of Realtors said this month that O'ahu resales fell in September after reaching record levels in August. The board said 261 existing single-family homes were sold in September, down 11.8 percent from 2000.

Single-family homes sold at a median price of $308,000 in September, up 0.03 percent from August and 10 percent from September 2000.