Baby Boomers Get Credit for 1.1% Advance : Existing Home Sales Post 1st Gain Since August

Sales of existing homes rose 1.1% in November, the first advance since August, a real estate trade group reported Tuesday.

Analysts credited the rebound in part to the strong participation of baby boomers in the housing market, saying their numbers alone should help keep sales steady in 1989 despite forecasts of higher mortgage rates.

The National Assn. of Realtors said existing single-family homes were sold at a seasonally adjusted annual rate of 3.71 million units in November, compared to an October sales pace of 3.67 million units.

Sales had shown no improvement at all in October after dropping by 1.1% in September.

Sales of new homes have been rising as well. In October, sales of new single-family homes climbed to 733,000 units, the highest level in 20 months. The government will report new home sales for November on Friday.

Analysts attributed the sales upswing in part to a growing number of buyers in the marketplace.

“The fact is, the bulk of the baby boom is now being felt in housing markets across the country,” said John Tuccillo, chief economist for the realtors group. “The strong pace of existing home sales in November is more a tribute to the numbers of buyers out in the market than it is to any particular short-term economic conditions.”

The November gain was the first increase since a 2.2% rise last August.

The price of an existing home edged down slightly to $87,900 in November, compared to an October median price of $88,100.

Tuccillo said he expected home sale prices nationally to increase 4.8% for all of 1988, about in line with the overall rise in consumer prices. That would be down from a 6.6% price increase recorded in 1987.

The price moderation was attributed to a shift in sales from the more expensive markets of the Northeast to the less expensive markets in the Midwest.

The Northeast remained the most expensive place to buy a home with a median price of $142,500 in November, up 5.9% from a year ago. The typical home in the West sold for $122,300 in November, up 6% from a year ago.

Homes in the South sold for $80,300 in November, an increase of 1.4% from a year earlier, while the Midwest remained the least expensive housing area at $66,700, an increase of 3.6% from a year ago.

Many economists had been expecting a drop in sales of both new and existing homes in 1989 because of rising mortgage rates. Last week, 30-year fixed-rate mortgages averaged 10.68%, and many analysts are predicting that they will hit 11.5% by spring.

However, Tuccillo said the large number of adults in their 30s and 40s who are looking for homes had prompted him to revise his outlook for 1989 to show sales of around 3.38 million, down only 4.2% from an expected 3.53 million sales this year.

In November, the sales increase was led by a 4.6% rise in sales in the Northeast, which climbed to an annual rate of 680,000 units, up 3% from a year ago.

The West was the only region of the country reporting a month-to-month sales decline, a 7% setback, which left the annual sales pace at 660,000 units, still nearly 18% higher than a year ago.

Sales were up 4.3% in the Midwest, to an annual rate of 960,000 units. This is 7.9% above the sales rate a year ago as this region continues to benefit from a boom in export sales by manufacturing companies.

Sales were unchanged in the South, at an annual rate of 1.40 million units but this was 11.1% higher than a year ago, reflecting the fact that the region has begun to recover somewhat from depressed conditions caused by a slump in the Oil Patch.