Sales of existing condominiums and cooperatives slowed in the first quarter but posted the third highest sales pace ever, according to the National Association of Realtors.
The seasonally adjusted annual rate for existing-condo and -co-op sales slipped 0.3 percent to 937,000 units in the first quarter from an upwardly revised 940,000-unit rate in the fourth quarter. Sales activity in the first quarter was 11.2 percent above the 843,000-unit sales level during the same period in 2003.
The record was an annual rate of 941,000 units in the third quarter of last year–only 0.4 percent above the current pace.
David Lereah, NAR’s chief economist, said the correlation between strong condo sales and low interest rates is pretty obvious.
“Mortgage interest rates were at the second lowest level on record in the first quarter, so it should come as no surprise that we see condo sales within a fraction of a percentage point of a record,” he said. “Couple this with a demographic push at both ends of the market, along with an improving economy, and you have a powerful combination for an exceptional condo market.”
According to Freddie Mac, the national average commitment rate for a 30-year conventional fixed-rate mortgage was 5.6 percent in the first quarter, down from 5.92 percent in the fourth quarter; the rate was 5.84 percent in the first quarter of 2003. The lowest quarterly average was 5.51 percent in the second quarter of 2003; the series began in 1971.
NAR President Walt McDonald, broker-owner of Walt McDonald Real Estate in Riverside, Calif., said about half of all condos are purchased by first-time buyers. “At the same time, many empty nesters are buying upper-end units to accommodate lifestyle changes – 42 percent of all condos are purchased by buyers who are at least 45 years old. Condos are proving to be a good investment choice for both ends of the housing market, with double-digit appreciation during each of the last three years.”
The median existing condo/co-op price during the first quarter was $173,300, which is 14.5 percent higher than the same quarter in 2003. The median is a typical market price where half of the units sold for more and half sold for less. By comparison, the median price of an existing single-family home was $170,800 in the first quarter, up 6.5 percent from a year earlier.
Lereah said the national median condo price is skewed relative to the national median single-family home price. “Because there is a higher concentration of condos in more expensive housing markets, the price becomes a little distorted,” he said. “This causes the national median condo price to be higher than the national single-family home price, but within a given area condos typically remain more affordable than houses.”
In the South, condo/co-op resale activity rose 1.4 percent in the first quarter to a 436,000-unit pace, and was 12.7 percent higher than the same quarter in 2003. The median price in the South was $143,100, which was 16.1 percent higher than a year ago.
In the Northeast, existing-condo and -co-op sales slipped 0.6 percent in the first quarter to a 153,000-unit pace, but were 8.5 percent above the first quarter of 2003. The median price in the Northeast was $189,900 in the first quarter, up 19.6 from the same period a year earlier.
Condo and co-op resale activity in the Midwest was at a seasonally adjusted annual pace of 110,000 units in the first quarter, down 1.8 percent from the fourth quarter, but was 5.8 percent above the same period last year. The median condo price in the Midwest was $165,600, up 7.6 percent the first quarter of 2003.
In the West, existing condo and co-op sales declined 2.5 percent to an annual rate of 238,000 units in the first quarter, but were 13.3 percent above the sales rate during the first quarter of 2003. The median condo price in the West was $221,100 in the first quarter, up 19.8 percent from a year ago.
The National Association of Realtors is a trade association representing 1 million Realtors involved in all aspects of the residential and commercial real estate industries.