Jump in New-Home Sales Spurs Hopes of Long-Awaited Revival : September’s 77% Year-to-Year Gain Continues 8-Month Statewide Trend
New-home sales in California jumped in September to their highest level in 3 1/2 years, bucking the traditional end-of-summer slowdown and further bolstering hopes that the state’s battered housing market is finally on a firm road to recovery, a real estate research firm said Tuesday.
Nearly 7,700 new homes were sold statewide in September, up 13% from August and 77% higher than the depressed levels of a year ago, La Jolla-based Dataquick Information Systems said. More than 5,100 of those homes were sold in the six-county region of Southern California, 26% higher than August and more than double the number sold in September, 1992.
It was the eighth straight month in which new-home sales in California have climbed and the latest sign that the state’s housing market is slowly clawing its way out of a slump that has lasted for more than three years.
“It looks like the California market is finally staggering up off the canvas and getting back on its feet,” said John Karevoll, the analyst who compiles Dataquick’s monthly report.
The upbeat report came as some real estate markets remained in turmoil caused by last week’s fires across Southern California and the new ones that started Tuesday in Malibu and the San Fernando Valley. The fires, however, have left most new-home communities untouched.
If the housing market is indeed pulling out of its doldrums, it would be good news for the state’s economy.
Home prices have been sliding since the market peaked in 1990, shaking the confidence of millions of homeowners. In turn, they postponed moving into nicer homes and reined in spending--compounding the regional economic woes caused by continued layoffs in aerospace and other industries.
The resulting downturn in new construction projects has cost some 100,000 carpenters and other on-site tradespeople their jobs over the past few years. And since construction is such a key ingredient in the state’s economy, the ripple effect of those layoffs is estimated to have cost at least 400,000 additional jobs--from loggers and truckers to carpet salesmen and furniture makers.
The prolonged drop in mortgage rates has sent home sales in most other parts of the United States soaring over the past two years. The Commerce Department said Tuesday that sales across the nation hit a seven-year high in September, rising 20.8% from August.
Now, after following a hefty 24% month-to-month sales gain in August with the 13% increase in September, some analysts say California is finally joining the nation’s housing rally.
“Our housing market is arriving a little late to the party, but we’re finally getting there,” said Lynn Reaser, senior economist at First Interstate Bancorp in Los Angeles.
September’s sales gains were even more impressive because they came at a time when activity typically drops sharply, as families settle in for the new school year and start making plans for the holidays.
Sales of existing homes in California also bucked seasonal trends and rose nearly 12% in September from August to their highest level of the year, the California Assn. of Realtors reported last week.
Much of the rebound in new-home sales has been attributed to steadily dropping mortgage rates and fierce competition among builders. Loan rates recently dropped below 7% for the first time in 25 years, while developers have been offering everything from deep price discounts to free appliances in an effort to turn browsers into buyers.
The new signs of strength have encouraged Whitehawk Partnership, a Pasadena-based builder, to begin construction on six new homes--each starting at about $500,000--in Woodland Hills. Construction had ground to a virtual halt earlier this year, as the developer waited for the market to turn around.
“We’ve already sold three of the six,” said Whitehawk salesman Bob Graves, adding that moving forward with the homes allowed the company to avoid laying off about half a dozen workers.
Bigger builders are having a much larger impact on the fortunes of construction workers.
Los Angeles-based Kaufman & Broad Home Corp. now has 90 communities under way statewide, up from 80 a month ago. The 10 extra projects have created between 500 and 1,000 new jobs, a company spokesman said.
A Steep Rise
New-home sales in September rose sharply in California and across the country. National Sales, seasonally adjusted annual rate, in thousands of units. Sept., ‘93: 762 Source: U.S. Department of Commerce.
California Sales, monthly rate, in thousands of units. Sept., ‘93: 7.6. Source: Dataquick Information Systems.
Southland County-by-County Sales
Sales of new homes in September were up from their depressed year-earlier levels in every Southland county.
% Increase County Sales from Year Ago Los Angeles 1,316 99.3 Orange 823 86.1 San Diego 991 112.5 Riverside 1,102 183.9 San Bernardino 734 99.1 Ventura 140 69.3
