Sales of Existing Homes Fall in Quarter

Double-digit mortgage rates and rising prices dampened sales of existing homes in many areas during the first three months of 1990 while boosting them in others, a real estate trade group reported Tuesday.

The National Assn. of Realtors said sales overall slipped 1.6% to a seasonally adjusted annual rate of 3.81 million units during the January-March period, down from 3.87 million units during the fourth quarter. Sales totaled an annual rate of 3.90 million units during the first quarter of 1989.

Association President Norman D. Flynn said rising mortgage rates had the dual effect of spurring sales in moderately priced areas while curbing them in higher-end markets.

“Buyers in affordable markets decided to buy before rates rose further, while those in high-cost areas held back,” Flynn explained.

The trade group’s survey showed that the median price of existing homes rose 5.2% to $95,900 from $91,200 during the same period of 1989. The median price means half of the homes cost more, half less.

Mortgage rates also rose, starting the quarter at 9.83% and ending it at 10.22%, according to the Federal Home Loan Mortgage Assn. Rates have continued to rise and hit 10.67% at the end of last week.

Nevertheless, the realtors said resales are expected to remain stable during the year as economic conditions improve.

The realtors survey covered sales of existing single-family detached homes, townhouses, apartment condominiums and cooperatives.

Sales were up in 29 states, ranging from a 49.1% jump in South Dakota to a 0.9% increase in Nevada. At the same time, Vermont posted a 24.8% decrease, the largest decline in the nation.

By region, the West saw sales rise 3% to an annual rate of 680,000 units, dominated by activity in California. Flynn reported some softening in high-cost coastal areas, while sales in some lower-priced interior areas increased.

The South had across-the-board increases, up 0.7% to 1.46 million units, as many Oil Patch areas continued to regain strength.