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News > Economy
U.S. home prices rise
August 13, 2001: 2:43 p.m. ET

NAR study shows prices of existing homes in metro areas up 6.4%
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NEW YORK (CNNfn) - The price of existing homes in U.S. metropolitan areas jumped in the second quarter, a real estate group said Monday, as the housing market continued to be a bright spot in the gloomy U.S. economy.

The median U.S. existing-home price was $146,900 during the second quarter, up 6.4 percent from $138,000 a year ago, the National Association of Realtors (NAR) said.

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graphicDespite a sluggish U.S. economy with poor corporate earnings, prices of existing homes in metropolitan areas rose 6.4 percent in the second quarter from a year earlier. CNNfn's Amanda Lang takes a closer look.
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Escalating home prices were fueled by brisk housing demand during the period, despite more people losing jobs and the ongoing slump in the stock market, NAR said.

"Clearly, the demand from near-record home sales is a major factor in higher home prices, but in most areas prices are not running away from people's ability or desire to buy," NAR President Richard Mendenhall said.

Home resales, although strong overall for the quarter, cooled off a bit in June when existing single-family home sales dipped 0.6 percent from May to an annualized rate of 5.33 million units.

Finance costs to buy a home moved up slightly in the second quarter. The interest rate on a 30-year fixed-rate mortgage was 7.13 percent, up from 7.01 percent in the first quarter but down from 8.32 percent in the second quarter of 2000, according to mortgage lender Freddie Mac (FRE: down $0.19 to $68.56, Research, Estimates).

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Low mortgage rates have helped keep the housing market strong during an economic slowdown that's gripped the United States for the past year. In order to keep consumers spending and avoid a recession, the Federal Reserve has cut its target for short-term interest rates six times this year and is expected to do so again when it meets Aug. 21 to discuss policy.

Of the 125 metro areas tracked by NAR, Sacramento, the capital of California, saw the biggest price increase in home resales in the second quarter, with a median of $176,000, up 23.9 percent from the same quarter in 2000.

Regionally, the strongest price increase was in the South, where median existing-home prices rose 10.2 percent in the second quarter from a year earlier to $139,400.

The Northeast showed the smallest increase in median existing home prices in the second quarter, rising 1.4 percent from a year ago to $146,000.  graphic


-- from staff and wire reports

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  RELATED SITES

NAR home price report

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