Homes Sales Rebound After Weak Summer
California’s housing market rebounded from a slow summer by posting a 5.6% increase in sales of existing single-family homes in September over August, the highest gain in six months, a real estate trade group said Wednesday.
Industry analysts, however, said the rebound was not the start of a longer-term rally in the market. It was the third month this year in which the median price of homes sold in California declined.
The California Assn. of Realtors said the spurt was part of a nationwide resurgence produced by pent-up demand from home-seekers who refrained from making major financial commitments during the summer. Those buying homes in September had been uncertain this past summer about the direction of interest rates and concerned about the future health of the economy, said Leslie Appleton-Young, an association economist.
“There were questions about the direction of interest rates and questions as to whether there would be a recession,” Appleton-Young said. “People who were staying out of the market are now getting back in.”
September’s total sales were the highest since May and constituted the greatest month-to-month increase since the March rise of 8.4%. Total sales, however, were 13.3% lower than in September, 1988.
The median price of homes sold in California dipped to $199,606 in September from $201,138 in August, a reflection of consumers buying lower-cost homes due to affordability problems, the trade group said. The median price was still ahead of the $177,107 in September, 1988. However, Appleton-Young said lower prices would not lead to the kind of ever-escalating sales recorded in the state last year.
The September rebound is an aberration, not the harbinger of a new sales boom, said Sanford Goodkin, national executive director of real estate at the San Diego offices of Peat Marwick Main, an accounting firm. Goodkin said declining interest rates lured many of the new buyers.
“I don’t think it’s the start of a trend,” he said. “Much of the activity involved people buying their first home, people more sensitive to (lower) interest rates.” By contrast, sales of higher-priced homes remain sluggish because current homeowners are hesitant to trade up, he said.
Interest rates on 30-year fixed-rate mortgages--at a U.S. average of 10.16% in September, down from 11.19% six months earlier--also attracted buyers nationwide, said the Washington-based National Assn. of Realtors.
Led by the West and spurred by stable interest rates, nationwide sales of existing homes rose 4.3% in September over August to its highest level since December, the national trade group said. The association said the seasonally adjusted annual sales rate of 3.63 million single family homes compared to the August rate of 3.48 million, and the highest since December’s 3.92 million.
The West--a 13-state region that experienced a 12.7% monthly increase--had the greatest hike in sales, the association said. Month-to-month sales were up 3.7% in the South and up 1% in the Midwest. The level of sales was unchanged in the Northeast.
The national median price for single-family homes in September was $93,400, down $1,400 from August but up 5.5% from September, 1988. Overall, the September sales of existing homes was 0.5% below that of one year ago.
SALES OF EXISTING HOMES
Seasonally adjusted, annual rate, milions of units Sept., 1989: 3.63 Aug., 1989: 3.48 Sept., 1988: 3.65
Source: National Association of Realtors
