THE ECONOMY : Sales of New Homes Dip 4th Straight Month

High mortgage interest rates continued to hammer new-home sales in March, driving them down 5% in the fourth consecutive monthly decline, the government said Monday.

“We’re getting killed by high interest rates,” said Richard Peach, deputy chief economist for the Mortgage Bankers of America.

David Berson, chief economist for the Federal National Mortgage Assn., agreed, saying that “as long as they (rates) stay up, the housing market is going to be slow.”

“It’s not a recession pace, but it’s clearly not a boom period for housing either,” he said.

The Commerce Department said new single-family homes were sold at a seasonally adjusted annual rate of 574,000 units in March after dropping a revised 1.5% in February. Sales originally were reported to have risen 3.1% in February.

The March level of sales was the lowest since an annual rate of 556,000 units a year earlier. Sales began to pick up in mid-1989 as mortgage interest rates declined, peaking at 741,000 units in July.

But rates returned to their double-digit level in January and ranged between 10.22% and 10.34% in March, according to a survey by the Federal Home Loan Mortgage Corp.

The National Assn. of Realtors also blamed high rates for flat sales of existing homes in March. They were unchanged from February’s seasonally adjusted annual rate of 3.4 million units.

Rates have continued to rise in April, reaching 10.56% on Friday, their highest level since averaging 10.61% in May, 1989, according to the Freddie Mac survey.

The outlook for rates “is not particularly positive,” said Robert Villanueva, director of forecasting for the National Assn. of Home Builders.

“We had hoped that as we got into the summer building season, that interest rates would begin to drop,” he said. “But there’s so many factors suggesting that rates will stay up that that’s probably a forlorn hope.”

But while rates were rising, the median price of new homes was falling, down 1.4% to $123,200. The median price means that half of the homes cost more, half less. On the other hand, the average price of a new home rose 0.7% to $150,300.

Sales in the South led the March decline, down 14.8% to 219,000 units. They were off 13.4% in the West to 161,000 units.

But in the Northeast, where housing has been in the doldrums, sales rose 33.8% to 99,000 units. They also were up in the Midwest, 9.2% to 95,000 units.

Berson said both increases were rebounds from the fourth-coldest December on record.