Home Resale Decline Reflects Industry Slump

Sales of previously owned single-family homes fell 1.1% in April, reflecting an industry slump caused by higher mortgage interest rates, the National Assn. of Realtors said Thursday.

April resales slipped to a seasonally adjusted annual rate of 3.36 million units, the slowest since February, 1988, when the rate was 3.32 million units. The rate was down 4.3% from year-ago levels.

“Higher interest rates have stymied efforts of renters to become homeowners,” said association President Ira Gribin. “First-time buyers, with no equity and a tight budget, continue to be left behind, particularly in high-cost areas.”

The national median price for a single-family home rose $1,500 to $93,500 last month, up 6.3% from year-ago levels, the NAR said. The higher median price reflects the purchase of more expensive homes by people less likely to feel the pinch of higher mortgage costs, Gribin said.

The nation’s benchmark mortgage rate ranged from 11.03% to 11.07% in April, according to the Federal Home Loan Mortgage Corp., the NAR said.

There were 2.64 million single-family homes on the market in April, a 9.4-month housing supply. The NAR, the trade group of the real estate industry, forecasts a boom in resales in the second half of 1989, sparked by a decline in interest rates.

Regionally, the resales slump was led by a 7.5% decline in the West, which had been enjoying brisk activity. The West had the sharpest median price increase, 19.5% from year-ago levels.

“It appears that higher rates have worked their way into the hottest markets,” said NAR chief economist John Tuccillo.

Resales were flat in the South--the region with the highest sales volume--while the pace picked up in the Northeast and Midwest.