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New Home Sales Rise 13.4 Percent in December; Home Builder Discusses Weston, Florida Market

Aired January 31, 2001 - 1:22 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

NATALIE ALLEN, CNN ANCHOR: Despite evidence of a slowdown elsewhere in the economy, new home sales rose a surprising 13.4 percent last month, the biggest gain in more than seven years. Lower mortgage rates and lower prices may be a factor.

CNN's Susan Candiotti is at a housing development in Weston, Florida with more about this -- Susan.

SUSAN CANDIOTTI, CNN CORRESPONDENT: That's right, Natalie. This is called Weston in a community built by Arvida Corporation. This community 15 years old. And there were record home sales here last year, which match those numbers nationwide. They were actually up 20 percent in the year 2000 over the year 1999. That despite a slip in consumer confidence, the lowest in four years.

So let us talk to the CEO of Arvida, Jim Matta, to get his take on the situation.

Mr. Matta, thanks for joining us. And we'd like to know, how do you explain the increase in sales figures, that huge jump in the month of December despite numbers that had gone down overall for the year 2000, down by 1 percent?

JIM MATTA, ARVIDA CORPORATION: Well, Susan, last year sales were extremely strong in Florida; all through the Southeast, too. So it didn't surprise me the numbers would be that strong in December. I think we'll have to watch and see what happens in the year 2001.

CANDIOTTI: But how do you explain it when we have seen a decline in consumer confidence, slipping to the lowest point in four years?

MATTA: I think there's some pent-up demand that happened at the end of the year. I think some relocations and some other things affected that number. But we'll see in the next coming months what it means for next year.

CANDIOTTI: In fact, in less than an hour we are waiting to see what will happen with interest rates. As you know, another half-point drop is expected to be announced. What impact do you expect that to have?

MATTA: Hopefully that will increase the consumer confidence, which this is the biggest investment somebody will buy in their life, is a home. So as consumer confidence rises, it really helps out our sales. So hopefully that will trigger a rise in consumer confidence.

CANDIOTTI: Do you think that because consumer confidence had been going down toward the end of last year that people were buying homes in the event the economy continued to decline and wanted to get in while they could?

MATTA: Well, I think mortgage rates are down from this time last year almost a full point. So a 30-year fixed rate is at 7 percent. And I don't think you can find a better mortgage than that. So I think a lot of that is what propelled the sales in December for mortgage rates.

CANDIOTTI: Mr. Matta, thank you very much for joining us. We are in model row of one of the homes here. And everyone waiting to see, including potential home buyer here, as to what will happen when those interest rates -- new interest rates -- will be announced in less than an hour from now.

Natalie, back to you.

ALLEN: And we'll be covering. Susan, thanks so much from Florida.

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