Sales of New Homes Rose 8% During June

Sales of new single-family homes nationwide surged 8% in June over May, the sharpest increase since November, the Commerce Department said Tuesday. But sales were off 5.8% in the West, the government noted.

Meanwhile, a slight increase in home prices since March made single-family homes less affordable to buyers in the Los Angeles and San Diego regions during the past three months, the California Assn. of Realtors reported Tuesday.

But in the Orange County region, single-family existing homes grew more affordable to the typical household, largely because of rising family incomes and a less-dramatic increase in home prices during the last three months, the realtors group reported. The region was the only one in California to experience an increase in affordability since March.

In its report on new home sales, the Commerce Department said sales totaled a seasonally adjusted annual rate of 581,000 units after posting a revised 2.3% gain in May. May sales first were reported last month to have risen just 0.4%, the first advance in five months.

Analysts cited lower mortgage rates as the catalyst for the June gain. However, new home sales for the first half of 1990 are still 9.7% below sales in the comparable 1989 period.

And the June gain was due to sales increases in the Northeast, up 36%, and in the South, up 13.6%. In the West, sales were off 5.8% to an annual rate of 146,000 units.

As for the California affordability data, the California Assn. of Realtors reported that 15% of households in the Los Angeles area could afford to purchase the median-priced home in June, compared to 16% in March.

Buying a home in the Los Angeles area at June’s median price of $215,029 required a household income of at least $70,938 and monthly mortgage payments of $1,773, the realtors’ group estimated. Those calculations assume that a household makes a down payment of 20% and applies 30% of its gross monthly income to payments on a 30-year mortgage.

In the San Diego area, 17% of households could afford an existing home at the end of June, compared to 18% in March. In Orange County, 15% of households could afford a home in June, compared to 14% at the end of March.

Statewide, the June affordability index remained unchanged compared to March but was up significantly compared to a year ago. In June, 18% of households could afford the median-priced home of $194,821, compared to 14% a year ago.

Although rates on 30-year fixed-rate mortgages have drifted downward since May, falling below 10% nationwide last month for the first time since January, the decline has yet to factor into the affordability index, said Leslie Appleton-Young, vice president of research and economics for the California Assn. of Realtors. The average interest rate on 30-year fixed-rate mortgages on which escrow closed in June in California was 10.13%, compared to 10.07% in March, she said.

But with the rate declines leading to lower mortgage payments in the future, “I think you will see continued or renewed improvements in affordability,” she said.

Nationwide, housing affordability decreased in June. The National Assn. of Realtors on Tuesday reported that its index fell to 102.8 from 104.7 in May, reflecting increased interest rates and home prices.

The index means that a household earning the median annual income of $34,250 has 102.8% of the income required to qualify for a mortgage with a 20% down payment. The median home price was $97,500 in June, up from May’s $95,600.HOUSING AFFORDABILITY IN THE SOUTHLAND

Index calculations assume that a household can make a 20% down payment and apply 30% of its gross monthly income toward payments on a 30-year mortgage. Qualifying income and monthly payment are based on the average of fixed- and adjustable-rate loans written during the first week of the target month.

JUNE, 1990

Average mortgage rate: 10.13%

Median Monthly Minimum Percent home sales housing qualifying households price payment ann. income qualifying United States $97,500 $804 $32,165 46% Calif. (single fam.) 194,821 1,607 64,272 18 Calif. (condo) 147,523 1,217 48,668 30 Los Angeles 215,029 1,773 70,938 15 Orange County 247,078 2,038 81,511 15 Riverside San Bernardino 133,833 1,104 44,152 29 San Diego 187,890 1,550 61,985 17 Ventura 242,805 2,003 80,102 12

MARCH, 1990

Average mortgage rate: 10.07%

Median Monthly Minimum Percent home sales housing qualifying households price payment ann. income qualifying United States $96,300 $791 $31,633 46% Calif. (single fam.) 196,621 1,615 64,586 18 Calif. (condo) 141,132 1,159 46,359 32 Los Angeles 210,458 1,728 69,131 16 Orange County 246,002 2,020 80,807 14 Riverside San Bernardino 130,537 1,072 42,879 29 San Diego 184,418 1,514 60,578 18 Ventura 240,651 1,976 79,049 12

JUNE, 1989

Average mortgage rate: 10.59%

Median Monthly Minimum Percent home sales housing qualifying households price payment ann. income qualifying United States $93,500 $797 $31,872 43% Calif. (sgl. fam.)(a) 199,441 1,700 67,984 14 Calif. (condo) 137,670 1,173 46,928 29 Los Angeles 220,253 1,877 75,078 10 Orange County (a) 251,837 2,146 85,844 11 Riverside San Bernardino 123,643 1,054 42,146 28 San Diego (a) 184,747 1,574 62,975 15 Ventura 248,728 2,120 84,784 9

Notes: (single fam.) = single-family detached home

(a) = Median price revised due to sample expansion

Mortgage averages are as reported by the Federal Housing Finance Board

Source: California Assn. of Realtors