Despite a small gain in December, sales of single-family homes nationally fell to five-year lows in 1990 as declining mortgage rates failed to pull the industry out of its slump, a major real estate trade group said Friday.
In 1990, 3.29 million previously owned homes were sold, down 4.3% from 1989. It was the lowest level since 1985, when home sales stood at 3.21 million, the National Assn. of Realtors said.
Home sale activity also slid drastically in California, where December sales dropped 9.8% from the previous month and 26.5% from December a year ago, according to the California Assn. of Realtors. Full-year statistics for California are not yet available.
Several analysts said they expect no quick improvement in the market either.
“On the whole, there’s nothing to get anyone too excited about an imminent turnaround in the housing market in general,” said Daryl Delano, an economist with Cahners Economics in Newton, Mass.
Sales should not slide much further, added Richard Peach, an economist with the Mortgage Bankers Assn., but will probably “bump along the bottom” until summer.
The slump in sales was blamed on the weakening economy and the crisis in the Persian Gulf, which combined to make Americans wary of major purchases.
Realtors and economists said they would expect the housing market to improve once the war is over.
“The more quickly the conflict is resolved, the sooner the housing market will respond to the extremely favorable interest rate environment,” said Leslie Appleton-Young, vice president of research and economics at the California Assn. of Realtors.
Median sales prices rose in December, both nationally and in the Golden State, according to the realtor groups.
In California, the median price rose to $192,930 from November’s median price of $192,280 and the year-ago median of $188,180. The national median price for single-family homes in December was $91,900, up $100 from November’s $91,800, but off $600 from December, 1989.
Notably, median prices slid in most major metropolitan areas of California, including Orange County, San Diego and San Francisco. In Los Angeles, however, the median sales price climbed to $216,430 from $211,860 a year ago.
The median price in Orange County dropped to $229,120 from $245,050; in San Diego it slid to $181,720 from $185,230, and in San Francisco, median prices dropped to $245,850 from $257,250.
Median prices indicate that half the homes sold for less money and half for more.
The housing industry in the depressed Northeast was hardest hit, with sales plunging 12.2% from the year before. This came despite a 2.8% drop in median sale prices.
The National Assn. of Realtors pegged December’s seasonally adjusted annual sales rate for existing single-family homes at 3.22 million units, up 2.2% from November’s 3.15 million. But the December rate was still almost 10% below the year-ago sales of 3.56 million units.
Federal Reserve Chairman Alan Greenspan said this week that while there are severe problems in the real estate market, they are manageable at this stage.
“I would say the lights are amber,” Greenspan said when asked whether red lights should be flashing over real estate problems.
EXISTING HOME SALES
Seasonally adjusted annual rate, millions of units. Dec., ’90: 3.22 Nov., ’90: 3.15 Dec., ’89: 3.56 Source: National Assn. of Realtors