U.S. Home Sales Set a Record

Sales of existing homes in the U.S. rose to a record in the first quarter as low mortgage rates spurred buyers, according to a report Wednesday from the National Assn. of Realtors.

With loan rates expected to fall to new lows soon, the housing market could stay hot, many economists say.

Sales of single-family homes, condominiums and cooperatively owned apartments rose to a 6.68-million-unit annual pace from the previous record of 6.59 million in the fourth quarter of 2002, the report said.

Single-family home prices rose 7% in the first quarter from a year earlier, a modest slowdown from the 8.4% year-to-year increase posted in the fourth quarter, said Cathy Whatley, president of the Washington-based trade group.

San Francisco remained the most expensive area to buy a single-family home, at $509,000 on average, followed by Orange County at $448,400 and Boston at $413,500.

The biggest price gain was in the Philadelphia area, where the first-quarter median price for a single-family home rose 25.7% from a year earlier to $153,400, the Realtors group said.

Rising home sales and prices have fueled speculation that the housing market is in a bubble, in which price outpaces value. The slowing in price growth to a level closer to the historical annual average of 4.3% means the market is returning to balance, even as low loan rates drive sales to record numbers, Whatley said.

Mortgage rates -- which averaged 5.62% last week for 30-year loans, according to loan giant Freddie Mac -- are expected to slide to new generational lows with this week’s report, tracking the decline in Treasury bond yields to their lowest levels since the 1950s.