New Home SalesCENSUS
880K
U.S. Housing Market · 1999
U.S. Housing Market in 1999
Existing SalesNAR
5.21M
Median PriceNAR
$133,300
30Y MortgagePMMS
7.43%
In 1999, the U.S. housing market recorded existing-home sales averaged 5.21 million, new-construction sales of 880K, and a 30-year fixed mortgage rate of 7.43%.
Existing-home sales rose 4.8% from 1998. the median existing-home price rose 3.8% to $133,300. the 30-year fixed mortgage rose 0.49 percentage points to 7.43%.
By the numbers — 1999: new-home sales 880K, existing-home sales 5.21M, median existing price $133,300, 30-year mortgage rate 7.43%.
Macroeconomic Context
As the millennium approached, the U.S. economy was firing on all cylinders. GDP grew approximately 4.8 percent, unemployment reached a 30-year low near 4.1 percent, and the federal budget surplus widened to roughly $125 billion. The dot-com boom was at full froth: the NASDAQ composite rose 86 percent during 1999, paper wealth was accumulating at an unprecedented pace, and consumer spending was buoyant. Consumer price inflation ticked up to about 2.2 percent as the economy ran hot.
The Federal Reserve, which had cut rates three times in late 1998 to contain the LTCM fallout, reversed course in 1999. Concerned about overheating, the Fed raised the federal funds rate twice — in June and August — pushing it back to 5.25 percent by year-end. Mortgage markets anticipated further tightening, and the 30-year fixed rate climbed from roughly 6.9 percent at the start of the year to about 7.9 percent by December — a full percentage point rise that would begin to slow the housing market heading into 2000.
Y2K preparations absorbed significant corporate IT spending through the year, and fears of computer failures dominated year-end commentary, though the transition proved largely uneventful. Globally, most Asian economies were recovering from the 1997–98 crisis, Brazil had navigated its own currency devaluation, and geopolitical tensions centered on Kosovo and the NATO intervention in Yugoslavia.
Housing remained strong through most of the year on the strength of the labor market and wealth effects, though the rate rise in the second half began to cool the pace of sales that had set records in 1998. The seeds of a coming slowdown were planted — not yet in housing fundamentals, but in rising borrowing costs.