Sales of existing homes held at a steady pace in October as lower mortgage rates opened the resale market to a wider range of buyers, the National Assn. of Realtors said Monday.
The trade association said sales of single-family homes at a seasonally adjusted annual rate totaled 3.52 million in October, unchanged from September's revised rate and down 4.3% from the October, 1988, rate of 3.68 million.
The resale pace was the highest since January's rate of 3.55 million units and not that much lower than the solid housing years of 1986 and 1987, said Rob Rosenblatt, an economist with the Mortgage Bankers Assn.
"The future for the overall housing market is a bit brighter because of a slowdown in economic activity coupled with a slow but steady drop in mortgage rates," he said.
A decline in interest rates nationwide began in March, and the trend is expected to continue, housing economists said.
They expect mortgage rates to remain low into the first quarter of 1990, possibly through the spring, dropping to about 9% from the current average of 9.75%.
The Federal Home Loan Mortgage Corp. reported Nov. 17 that the national average for a 30-year, fixed-rate mortgage was 9.72%.
The national median price for existing single-family homes was $92,100, down $2,200 from September but up $3,200 from the same period a year ago. The median represents the price at which half the homes sold are more expensive and half are less expensive.
"Home financing conditions probably will stay quite favorable in the months ahead," said John Tuccillo, NAR chief economist. "But rates can't drop low enough in high-cost areas to make homes affordable to buyers on a tight budget."
Regionally, the West was the only area recording a month-to-month resale pace increase, with October home sales rising 3.4% from September to 610,000 units.
The median existing home price in the West was $142,200 in October, which was $5,400 below the previous month but $12,200 above October, 1988.
Stable activity was recorded in the South, with existing home sales totaling 1.34 million units, unchanged from September, while the median home price fell $1,000 from September to $83,400.
In the Midwest, the region containing the largest concentration of affordable housing, the October resale rate dropped 1% to 980,000 units from 990,000 the previous month, while the median home price slipped $1,300 to $70,900.
The Northeast resale pace dipped to 580,000 units, down 1.7% from 590,000 in September, while the median home price fell $2,400 from September to $143,300.
In October, there were 2.11 million existing single-family homes available for sale, representing a 7.2-month supply at the month's resale rate.
In September, an inventory of 2.32 million units was recorded, which was a 7.9-month supply at the September resale rate.