PULLMAN, Wash. — Despite increasing mortgage interest rates and lower levels of housing affordability, the sales of homes throughout Washington surged to record levels during the second quarter of 2004, reports the Washington Center for Real Estate Research at Washington State University.
Median prices for resale homes were much higher than a year earlier, consistent with the record sales pace, according to WCRER data.
Glenn Crellin, director of the center, said, “Consumers who postponed buying a home last year because they wanted to ensure a bargain interest rate or because they were uncertain about the overall economy, flocked to the market this spring. They realized that they may have missed the absolute lowest level of interest rates, but seemed finally convinced that the economic recovery was real and that their jobs were safe.”
Second quarter home sales totaled 49,020 units statewide, 15.1 percent higher than spring 2003 and nearly 5,000 units above the previous record quarter (third quarter 2003). Quarterly sales were above the past year’s levels in all 39 of
In terms of new residential construction, building permits were issued for 12,654 housing units in the second quarter 2004, 11.8 percent above the levels one year ago. Single-family construction was especially strong, increasing nearly 20 percent over the past year.
The median sales price for an existing home in
“Half of all homes sold during the quarter were less expensive than this median,” Crellin said. “But with price increases much higher than inflation, it’s no surprise housing is becoming less affordable.”
Median prices ranged from $75,000 in rural
Mike Flynn, 2004 president of the Washington Association of REALTORS®, adds, “Our members continue to report that their biggest problem is locating properties to sell. The shortage of inventory reported for the first quarter was even a bigger problem in recent months and further increases the pressure on prices. As the state’s economy continues to recover we will need to see construction of even more homes to sustain a healthy market.”
The Housing Affordability Index, which measures the ability of a middle-income family (two or more persons related by blood, marriage or adoption) to afford to purchase a median-price home using a 30-year mortgage at prevailing interest rates, reflects Flynn’s concerns. The second quarter index slipped to 123.0, the lowest reading in two years. While the index suggests a typical family could still afford to purchase the median home with a 23 percent income cushion, a drop of 10 points in the index in one quarter is significant. A year ago the index achieved its highest reading of 135.0, Crellin said. Only
“First-time buyers are having an especially difficult time locating affordable housing,” Crellin said. Housing affordability for those would-be first-time buyers also declined to its lowest level since mid-2002, with an index value of 71.5, meaning the typical renter household looking to own has only about 72 percent of the income required to cover the mortgage payments on the typical starter home. First-time buyer affordability passed the 100.0 threshold in only 13 counties, four fewer than during the opening months of the year. “This illustrates clearly that affordability issues are beginning to threaten the housing market,” Crellin said.
WCRER and WAR have produced statistics like these since early 1994, timing each quarterly release to coincide with wire releases of existing home sales by state and median home prices by metropolitan area from the National Association of REALTORS®. Sales data is available for every county and median home prices and affordability are reported for 36 of
Additional information and a Second Quarter 2004 Housing Market Snapshot is available on the WCRER Web site at https://www.cbe.wsu.edu/%7Ewcrer/.
