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Mass. home sales leap 25% in Sept.

Condominium closings up 38%

Single-family home sales in Massachusetts increased last month by the biggest margin in six years, confounding experts and defying a sluggish economy.

"These numbers confirm that the appetite for housing in Massachusetts is absolutely insatiable," said Wayne Ayers, chief economist for FleetBoston Financial Corp.

The number of single-family home sales increased to 4,837 units in September, up from 3,859 a year ago, a 25.3 percent hike, according to the Massachusetts Association of Realtors. The last time sales reached this level was September 1997 when sales jumped by 27.4 percent.

Peter Casey, the trade group's president, was surprised by the sales surge. He said fluctuations in mortgage interest rates may have caused first-time buyers and empty nesters to leap into the housing market.

The average rate for a 30-year fixed mortgage bottomed out at 5.21 percent in mid-June. By Labor Day it had climbed to 6.44 percent, the highest level in 2003. Rates fell to 6.14 percent in September, according to Freddie Mac's Primary Mortgage Market Survey.

"I never expected sales to increase by this much," Casey said. "Last month, I said the lack of consumer confidence could contribute to a downturn in sales. But with interest rates at about what they were a year ago, lots of entry-level buyers took advantage of falling rates."

The average price for a single-family home increased to $375,541 in September, up 7.9 percent from $348,060 during the same month last year. While prices have risen each month for the last 87 months, prices appear to be moderating this year. Five times so far in 2003, monthly price increases have been less than 9 percent, down from the double-digit margins of the last few years.

September condominium sales increased a whopping 38 percent over the same month last year. The average condo price rose to $267,483 last month, a 10 percent increase over last year's average of $243,172.

William Apgar, senior scholar at the Joint Center for Housing Studies at Harvard University, said condo buyers who have waited for prices to fall are taking advantage of slowed increases.

"Interest rates inched up and eased down this year and lots of people pulled the trigger on deals that they were hesitating on," Apgar said. "Condo buyers are realizing that the best they can do is buy a home now before it gets further out of reach."

Single-family housing inventory levels swelled at the end of September, up 12.5 percent from one year ago, MAR said. In the condo market, inventory jumped 20 percent from one year ago.

Nationally, existing-home sales rose 20.8 percent in September to a seasonally adjusted annual rate of 6.69 million units, up from the 5.54 million units pace in September 2002, according to the National Association of Realtors. NAR president Cathy Whatley, said 2003 would be a difficult year to top.

"We're expecting existing-home sales to rise about 6 percent over last year's record to roughly 5.9 million sales in 2003," she said. "Favorable market conditions will continue to drive home sales in 2004, but it will be hard to match this year's unprecedented level."

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