Existing condo and co-op sales slipped 2.0 percent to a seasonally adjusted annual rate* of 990,000 units in the third quarter from an upwardly revised record pace of 1.01 million units in the second quarter. Sales were 5.2 percent above the 941,000-unit level of sales activity in the third quarter of 2003.

David Lereah, NAR's chief economist, said condo sales will easily set a record this year. "We've seen an incredible pace of existing condo and co-op sales over the last six months, but we're also seeing some exceptional price appreciation," he said. "In fact, the median condo price has been rising at more than double the rate of single-family home prices. Although inventories are tight, the reason goes beyond supply and demand with a greater mix of upper-end units working their way into the market."

The median existing condo price was $197,000 in the third quarter, which is 18.0 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-priced existing single-family home was $188,500 in the third quarter, up 7.7 percent from a year ago.

Because there is a higher concentration of condos in more expensive housing markets, the national median condo price is higher than the national single-family home price. Within a given area, condos typically cost less than houses.
NAR President Walt McDonald, broker-owner of Walt McDonald Real Estate in Riverside, Calif., said the condo sector has come into its own. "This will be the ninth consecutive record year for condo sales," he said. "Even when a recession slowed the single-family home market in 2000, the condo market continued to boom. In terms of sales, the existing condo and co-op market is essentially as large now as the new single-family home market."

"Low mortgage interest rates are enabling first-time buyers to enter the housing market, and in high-cost areas that often means a lower-end condo unit. At the same time, empty-nesters are using the equity from a larger single-family home and are driving sales at the upper end of the condo market," McDonald said.

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was 5.89 percent in the third quarter, down from 6.13 percent in the second quarter; the rate was 6.01 percent in the third quarter of 2003.
Existing condo and co-op sales in the Midwest increased 3.4 percent from the second quarter to a record level of 121,000 units in the third quarter, and were 6.1 percent above the third quarter of last year. The median resale condo price in the Midwest was $184,900, up 13.1 percent from a year ago.

In the South, condo/co-op resale activity slipped 1.8 percent in the third quarter to a 446,000-unit pace, but was 4.7 percent higher than the same quarter in 2003. The median price in the South was $169,900, which was 28.0 percent higher than a year earlier.

In the West, the sales pace of condos and co-ops declined 3.7 percent from the second quarter to an annual rate of 258,000 units in the third quarter, but was 3.2 percent above a year ago. The median price in the West was $244,400, up 20.5 percent from the third quarter of 2003.

In the Northeast, condo/co-op resale activity was down 4.1 percent from the second to the third quarter to a 165,000-unit pace, but was 9.3 percent above the third quarter of 2003. The median price in the Northeast was $219,800, up 17.7 percent from a year ago.

* The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative resale pace for that quarter were maintained for four consecutive quarters.

Seasonally adjusted sales rates are used in reporting quarterly data to factor out seasonal variations in resale activity to account for difference in weather and household buying patterns.

NAR began tracking the condo/co-op market in 1981; prior to the late 1970s, condos were not an important segment of the nation's housing market.

The National Association of Realtors® , "The Voice for Real Estate," is America's largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.