New Home SalesCENSUS
973K
U.S. Housing Market · 2002
U.S. Housing Market in 2002
Existing SalesNAR
5.63M
Median PriceNAR
$158,100
30Y MortgagePMMS
6.54%
In 2002, the U.S. housing market recorded existing-home sales averaged 5.63 million, new-construction sales of 973K, and a 30-year fixed mortgage rate of 6.54%.
Existing-home sales rose 5.4% from 2001. the median existing-home price rose 7.0% to $158,100. the 30-year fixed mortgage fell 0.43 percentage points to 6.54%.
By the numbers — 2002: new-home sales 973K, existing-home sales 5.63M, median existing price $158,100, 30-year mortgage rate 6.54%.
Macroeconomic Context
The U.S. economy emerged from the 2001 recession but remained fragile in 2002. GDP growth recovered to approximately 1.7 percent, but unemployment continued rising — peaking near 6.0 percent — and corporate earnings were under severe scrutiny after accounting scandals at Enron, WorldCom, and other major companies shook investor confidence. The Sarbanes-Oxley Act, enacted in July, represented the most significant overhaul of corporate accounting rules since the New Deal.
The Federal Reserve kept the federal funds rate low — cutting it to 1.25 percent in November — as policymakers worried about deflation risk and a double-dip recession. Consumer price inflation was subdued at roughly 1.6 percent. The combination of a near-zero real policy rate and aggressive mortgage-market competition created conditions for a housing boom that few recognized as such at the time.
Thirty-year fixed mortgage rates averaged around 6.5 percent for the year — meaningfully below the levels of the late 1990s — and the refinancing wave that began in 2001 accelerated. Homeowners who had purchased at 7 or 8 percent rates refinanced to sub-7-percent products, lowering monthly payments and freeing cash for consumption. Subprime originations were growing but had not yet reached the scale that would define the mid-decade boom.
Geopolitically, the Bush administration was building a case for military action against Iraq, and the authorization for use of force passed Congress in October. The prospect of Middle East conflict kept oil prices elevated and consumer sentiment cautious.
For housing, 2002 was a breakout year. The combination of low rates, recovering confidence, and demographic demand pushed existing-home sales to record levels and accelerated median price appreciation — signs of a boom cycle beginning in earnest.