Existing Home Sales Drop Nationwide : Economy: But sales in California rise slightly for the first time in 12-month period. Realty groups see signs of market upswing.
The sales of previously owned homes nationwide slipped in October for the first time in six months, according to figures released Monday, but California home sales rose, providing new evidence of a slow recovery in the residential real estate market.
The sales of existing single-family homes statewide rose eight-tenths of a percentage point from October, 1994, to an annualized, seasonally-adjusted rate of 468,880 units, the California Assn. of Realtors (CAR) said Monday. It was the first year-to-year increase in 12 months, the association said.
“The increase is fairly small,” said economist Chris Taylor at Wells Fargo Bank. “But it is still significant because we have begun to see home sales begin to pick up in California.”
In Orange County, home sales fell 5.5% from October a year ago, while prices dropped nearly 5% to $205,000. In San Diego County, home sales were up 13.1% from a year ago, while prices dropped only 0.6%.
Nationwide, single-family home sales dropped 1.9% in October, to 4.07 million at a seasonally adjusted annual rate, according to the National Assn. of Realtors (NAR). The nationwide median price of an existing home was $113,600 in October, up 5.7% from $107,500 in October, 1994.
Many analysts had expected a sales rate of 4.11 million. Still, it was the third straight month the national sales rate remained above 4 million. They had risen to 4.15 million in September, the fifth advance in five months, following a deep slump earlier in the year.
“The housing industry remains incredibly strong,” said NAR President Art Godi, who credited the increases to attractive mortgage rates.
Last week, the 30-year, fixed-rate mortgages averaged 7.32%--the lowest rate in 15 months, according to the Federal Home Loan Mortgage Corp.
But economist Cheryl R. Katz at Merrill Lynch & Co. said that despite falling rates, existing home sales appear to have leveled off because of a slowing economy and consumers’ heavy debt burdens.
Another sign of slower sales appeared Monday when the Mortgage Bankers Assn. reported that loan applications for the week ending Nov. 17 had declined 4.4% from the previous week. Still, volume was up 67.8% from a year earlier.
“It takes more than low rates to keep a market moving,” said NAR economist John A. Tuccillo. “It takes jobs and affordable housing that is within a reasonable commute.”
On a regional basis, the South experienced the biggest sales drop, down 2.6%. Sales fell 1.9% in the Midwest and dropped 1.6% in the Northeast. In the West, sales were down 1.1%.
In California, the statewide median price in October fell 3.2% from the same month last year to $176,040, according to CAR.
“As expected, home sales activity in California has continued to increase during the second half of 1995, significantly outperforming disappointing sales levels that occurred earlier this year,” CAR President Rick Snyder said.
Despite signs of a turnaround, many real estate observers said the state’s recovery will remain uneven and painfully slow.
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Existing Home Sales
Seasonally adjusted annual rate, millions of units:
October 1995: 4.07
Source: National Assn. of Realtors