SPRINGFIELD (August 11, 2005) Sales of existing single-family homes for the second quarter of 2005 surpassed market expectations and reached another record as low mortgage interest rates and favorable market conditions continued to attract buyers, according to the Capital Area Association of REALTORS®.

Home sales during the second quarter of 2005 exceeded the prior year’s record-setting second quarter by 3.8 percent with 1,252 homes sold as compared to 1,206 homes sold during the same period of 2004.

Gail Chevalier Zini, CAAR’s president, said home sales were expected to ease slightly during the second quarter over the prior year. “Just when you think sales activity is ready to settle into a more sustainable pace, the housing market continues to surprise,” she said. “We’ve been expecting sales to remain at historically high levels, but this performance underscores the value of housing as an investment and the importance of homeownership in fulfilling the American dream.”

The median sale price of a home during the second quarter of 2005 was $102,500 reflecting a modest increase of 6.8 percent over the 2004 median sale price of $96,000. Total home sales volume for the second quarter of 2005 reached $151.6 million reflecting a 9.6 percent increase from the previous year.

The Federal Home Loan Mortgage Corp. reported that the national average commitment rate for 30-year, conventional, fixed-rate mortgages was 5.7 percent during the second quarter of 2005, down from the 6.1 percent rate at this time in 2004.

Chevalier Zini said low interest rates are keeping housing affordable. “We have to go back to the mid-1960s to see a period of comparably low mortgage interest rates,” she said. “A big difference now is a decline in mortgage origination costs, plus a mushrooming in the availability of low- and no-downpayment loans. These are particularly helpful to first-time buyers in high-cost markets, but buyers need to shop loans and be aware of long-term consequences, and they may need to stay in their home longer to build enough equity to trade-up to a larger home in the future.”

Chevalier Zini cautions buyers to avoid shortcuts and to take time to fully understand all aspects of the purchase. “In a market where it’s common to see multiple bids on homes, buyers should avoid the temptation to skip appropriate inspections or documentation that would protect their interests,” he said. “Even more important is to understand the riskier loan products that are on the market today. There are insufficient disclosures regarding the risks of some of these products, so be sure to work with a professional who can offer guidance on the kinds of loans that are better suited for your situation.”

Second quarter 2005 sales of all property classes combined (i.e., commercial, industrial, farm, residential, vacant land) reveal sales of 1,399 properties during the second quarter of 2005, up 3.1 percent over the 1,356 sales reported during the same period of 2004. Total dollar volume of all real estate sold increased 10.2 percent with $165.6 million sold during the second quarter of 2005 as compared to $150.2 million during the same period last year.

The Capital Area Association of REALTORS® is the Voice for Real Estate in the Capital Area representing more than 700 members involved in all aspects of the real estate industry. The Capital Area’s Resource for Real Estate Information can be found at www.SeeHouses.com.