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Existing-home sales drop
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November 29, 1999: 12:24 p.m. ET
Sales of existing homes fell 6.6% in October; lowest rate in almost two years
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NEW YORK (CNNfn) - Sales of existing homes fell for the fourth straight month in October to the lowest rate in almost two years as higher mortgage rates discouraged buyers, a real estate group said Monday.
Existing-home sales fell 6.6 percent last month to an annual rate of 4.79 million units, down from 5.13 million units in September, the National Association of Realtors said. Analysts had expected a rate of 5.20 million units. Sales were down 3 percent from the 4.94 million units recorded a year ago.
The average price of a home fell 1 percent to $133,100 in October from $134,400 in September.
Even with the declines, NAR President Dennis Cronk said the outlook for sales going forward remains strong. The NAR is currently predicting existing-home sales to top the 5 million mark for the first time this year, setting a record for the fourth year running.
Strong demand
"Demand is strong in both the entry-level and trade-up segments of the market," Cronk said. "Home buyers continue to enjoy a variety of factors, such as wage growth and low inflation, that make it easier for them to afford to own a home."
Existing-home sales are considered an important gauge of the pace of the economy because they account for more than three-quarters of all U.S. homes on the market.
Since closings on existing homes occur as much as 60 days after a buyer signs on the dotted line, changes in mortgage rates from two months ago are a much stronger influence than where current rates stand.
The average 30-year mortgage rate was 7.94 percent in August and slipped to 7.82 percent in September, according to weekly statistics compiled by mortgage broker Freddie Mac. The rate was 7.75 percent last week.
On track for record
Even with this year's overall rise in mortgage rates, the NAR projects more than five million previously owned homes will be sold this year, making it the fourth straight record year for sales.
"The point here is that the weakness looks like a trend, and it's good news for the Fed,” said Ian Shepherdson, chief U.S. economist with High Frequency Economics.
The Federal Reserve has raised short-term interest rates three times since June -- most recently on Nov. 16 when it lifted its trend-setting Fed funds rate a quarter point to 5.5 percent. Higher official rates and concerns about inflation have pushed up government bond yields in recent months, which are directly tied to mortgage rates.
At midday, the benchmark, 30-year Treasury bond was down 11/16 of a point with a yield of 6.28 percent, up from 6.23 percent Friday. 
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