Bucking a nationwide decline, California's existing-home sales in February rose 2.9% from January, according to figures released Monday, as the state's home buyers took advantage of a drop in interest rates.
On a nationwide basis, sales of existing homes fell 5.0% in February from January levels, said the National Assn. of Realtors in a report that some economists said might discourage the Federal Reserve Board from raising interest rates at its policy-setting meeting that begins today.
This difference is primarily the result of California's economic recovery, which began later than the national rebound and continues to pick up steam, aiding home sales, according to real estate observers.
Statewide, 408,340 single-family detached homes were sold during February on a seasonally adjusted, annualized basis, compared to a revised 396,960 in January, according to the California Assn. of Realtors. The statewide median price of an existing, single-family detached home sold during February was $173,810, down 1.9% from a revised $177,200 in January.
However, the state's month-to-month gain was tempered by a steep, 18.6% drop from the record sales pace recorded in February, 1994, when 501,500 homes were sold. Most of the drop was blamed on the severe winter storms that hit the state.
"It is encouraging, however, that California home sales increased during February from the month before--a sign that many home buyers are beginning to respond to continued declines in mortgage interest rates," association President Ed Albers said in a statement.
Nationally, sales fell to a seasonally adjusted annual rate of 3.43 million units from an upwardly revised 3.61 million units in January, the national realtors group said. February's median price of homes slipped to $107,100 from $108,100 in January, the NAR said. The median price was nearly identical to the $107,000 in February last year.
The realtors group blamed the slowdown to increases in short-term interest rates over the past year, resulting in slower economic growth and a dimmed employment outlook. "In many cases, people simply don't feel good enough about job prospects or job security to buy a home," NAR President Edmund Woods said in a statement.
The Federal Home Loan Mortgage Corp. said the average commitment rate for 30-year, fixed-rate mortgages fell to 8.77% in February from 9.15% in January, but it was up sharply from 7.15% in February 1994.
However, some analysts took heart in last month's decline in mortgage rates and said buyers will be out looking as the spring selling season gets under way.
"The lower rates will help (housing) affordability," said Eugene Sherman, director of research at M.A. Schapiro & Co., a broker dealer. "I'm looking for a snap back in the spring," he said.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
U.S. Sales Decline
Seasonally adjusted annual rate, in millions of units:
Feb. 1995: 3.43
Source: National Assn. of Realtors