Home Sales Decline; Interest Rates Cited
High mortgage rates slowed existing home sales in the second quarter, according to a report from the National Assn. of Realtors released Tuesday, but housing analysts said sales will probably increase in the third quarter of the year.
“Interest rate declines that continued during the summer likely will result in across-the-board sales increase for the third quarter,” said John Tuccillo, chief economist for the National Assn. of Realtors.
Traditional fixed-rate mortgages dropped to 10.60% in early July, the first time this year they’ve dropped below 11%, said the Office of Thrifts Supervision. Adjustable-rate mortgages dropped to 9.73% from 10.05%.
But Tuccillo cautioned that activity nationwide is not expected to reach last year’s level due to stubbornly high home prices.
The association’s quarterly survey of previously owned home sales showed the national seasonally adjusted annual resale rate of 3.72 million units for the second quarter, down from 3.84 million in the previous quarter.
The survey, which covered April, May and June, included sales of existing single-family detached homes, town houses, apartment condominiums and cooperatives.
State Sales Off
The California Assn. of Realtors also reported a 14.9% drop in existing single family home resales between the first and second quarters of this year.
Statewide, 523,692 detached homes closed escrow on a seasonally adjusted, annualized basis in the second quarter, down from 615,099 units sold in the first quarter. The second-quarter sales figure was 7.6% below the comparable period of 1988, when 566,881 homes sold on a seasonally adjusted, annualized basis.
The annualized rate represents the total number of transactions for the year, assuming sales continue at the second-quarter pace. This figure is adjusted to account for seasonal factors that influence home buying.
In a separate report, the NAR said the housing affordability gap between different markets widened in the second quarter. Home prices surged in many high-cost areas of the West, but remained stagnant in the Northeast’s most expensive areas.
The survey showed median home prices ranging from $47,700 in Peoria, Ill., to $265,700 in the San Francisco Bay Area.
The West’s median price for the second quarter was $139,700, up from $132,200 from the previous quarter. The resale pace of homes was 640,000 units, down from 690,000.
The Northeast was the only region to post an increase in the sales rate of existing homes, rising by 1.3% to 790,000 units. However, the median price for the second quarter for homes in the Northeast was the highest of the four regions at $145,900, the survey indicated.
The Midwest, a region with less expensive housing, saw a median home price of $70,900, up from $69,200 in the first quarter. But resales fell to a rate of 950,000 units from 980,000.
The South, a geographic mixed bag stretching from Delaware to Texas, posted a second-quarter price increase to $84,700, while home sales dropped to 1.35 million units.
HIGH HOUSING PRICES, AND CLIMBING
Highest Appreciation Rates
Percent change from second quarter, 1988, to same period in 1989. HONOLULU: 32.1% SAN FRANCISCO: 31.0% LOS ANGELES: 24.6% SAN DIEGO: 23.8% ANAHEIM-SANTA ANA: 23.8%
Highest Median Resale Prices
Prices are for second quarter of 1989 SAN FRANCISCO: $265,700 HONOLULU: $262,500 ANAHEIM-SANTA ANA: $247,600 LOS ANGELES: $218,000 BOSTON: $188,600
Source: National Assn. of Realtors via Associated Press
