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Wed, Mar 27, 2002 - Page 21 News List

Home resales in US slip from January's fast pace


Previously owned US homes sold in February at the second-strongest pace on record, adding fuel to the economic recovery.

Sales fell 2.8 percent last month to 5.88 million homes at an annual rate, after soaring to an all-time high of 6.05 million in January, the National Association of Realtors said. Analysts had expected a decline to 5.54 million.

Low mortgage rates had already driven sales to a record 5.3 million last year, which included the start of the recession.

While interest costs are rising as the economy gains momentum, the erosion of sales may be eased as the result of improved employment and consumer confidence. Home purchases also fuel consumer spending on home furnishings at chains such as Pier 1 Imports Inc and Williams-Sonoma Inc.

"This points to stunning vigor in underlying demand for homes," said Jade Zelnik, chief economist at Greenwich Capital Markets Inc in Greenwich, Connecticut. The decline in sales will probably be limited.

The economy will probably keep expanding this year and in 2003, with little likelihood of falling back into recession, a survey by the National Association for Business Economics found.

Three-fourths of economists in the survey said the chances of a decline in gross domestic product this year or next were less than 50 percent. Nine percent put the odds of a so-called double-dip recession at greater than half, based on responses from 334 members. The recession began 12 months ago.

Previously owned homes account for 85 percent of all houses sold. The rest are new homes, and sales increased in February to 890,000 houses at an annual rate, based on the median of 48 forecasts, from 823,000 in January.

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