Top > Business > 2005 > October > 2005-10-29

Home prices still high

U.S. home sales are still surging even as analysts warn of a real estate ?bubble burst?, according to recent data that has been collected. The data, related to sales of previously owned homes, revealed that the median price of an existing home stood at $212,000 in September, up 13.4% from September 2004. Economists are predicting that rising mortgage rates will slow the pace of sales and the rate of price appreciation in coming months. Rates for 30-year mortgage have been above 6% the last several weeks, the first time since March.

The increase in home sales can be attributed in part to the exodus from the areas affected by Hurricane Katrina, which caused massive damage to the tune of billions of dollars over a wide swath of the U.S. coast of the Gulf of Mexico. Real estate industry forecasters had actually expected home sales to decline 1.2%, as the above-mentioned rising mortgage rates cooled off the booming housing market.

Even with the relatively good news (depending on how you look at it) with the real estate market, consumer confidence in the U.S. has been down this October thanks to multiple hurricanes ravaging the oil-industry rich Gulf Coast, which itself has contributed to higher gasoline prices. The storms? effects also have led to an increase in the U.S. unemployment rate, which before the onset of Hurricane Katrina had been at confidence-building lows.