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Existing home sales jump
One of the U.S. economy's strongest sectors gets even stronger in December, capping a record year.
January 27, 2003: 12:19 PM EST

NEW YORK (CNN/Money) - Sales of existing homes jumped in December, a group of U.S. realtors said Monday, wrapping up a record year for one of the strongest sectors of the otherwise sluggish U.S. economy.

A report from the National Association of Realtors (NAR) showed homes sold at an annual rate of 5.86 million in the month, up 5.2 percent from November's level. Analysts surveyed by had expected sales to rise to a 5.61 million rate in the month.

Approximately 5.56 million existing homes sold in all of 2002, the NAR said, the strongest year since the group started keeping records in 1968.

"The housing sector continues to be very, very healthy in a very weak economy," David Lereah, NAR's chief economist, told Reuters.

The report had little impact on U.S. stock prices, which were mixed in early trading. Treasury bond prices were mixed.

Last week, the Commerce Department said new home construction jumped in December to the highest level since 1986.

On Tuesday, the Commerce Department is expected to report how many of those new homes were sold in December. Economists, on average, expect new home sales to come in at an annual pace of 1.035 million, according to

Though that level of new home sales would be slightly off November's pace of 1.069 million homes, it would still be one of the best months on record -- coming amidst one of the worst holiday shopping seasons in 30 years.

A strong housing market has helped support economic activity during a sluggish recovery from a recession in 2001.

For one thing, super-low mortgage rates and surging home values have fueled a refinancing boom that's helped homeowners get lower monthly mortgage payments and cash in on a bonanza of home equity.

The refi boom -- which is likely near an end -- has fueled consumer spending, which makes up more than two-thirds of GDP.

And when people buy houses, they often buy furniture, paint brushes, lawn mowers and an array of other consumer goods to spruce up those houses.

Even homeowners who haven't refinanced or bought a new house have enjoyed the "wealth effect" of higher home values, counteracting the "poverty effect" of a three-year bear market in U.S. stock prices.

The NAR reported Monday the median price for existing homes rose to $164,000 in December from $161,400 in November. For the year, the median home price averaged $158,300, another record.  Top of page

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