Existing-Home Sales in State Rise in December
Sales of existing homes in California increased slightly in December from the previous month, but sales nationwide declined, in part because of inclement weather and the partial shutdown of the federal government, according to figures released Thursday.
The West was the only region that showed a home sales increase in December, according to a monthly report released by the National Assn. of Realtors.
In California, the seasonally adjusted, annualized rate of home sales rose 0.2% from November’s revised 482,150 units to 482,990, according to the California Assn. of Realtors. The statewide median price of $175,620 in December represented a 0.3% decline from the previous month and a 2.1% drop from December 1994.
The California group credited lower mortgage rates and the improved state economy for the pickup.
“It is especially promising that we ended 1995 with three consecutive months of year-to-year increases in sales,” said Rick Snyder, president of the California association.
Despite falling mortgage rates, nationwide sales of existing homes fell 3.2% in December to a seasonally adjusted, annualized rate of 3.91 million units. Sales in November fell to a revised 1.7%.
For all of 1995, U.S. home resales fell 3.4% from 1994, the Realtors said.
“The positive impact from attractive mortgage rates just isn’t enough to offset the weakness coming from the job market and the income market,” said Steven Wood, economist at BA Securities Inc. “It’s going to be hard, outside of a significant further drop in mortgage rates, to see how housing can be a positive contribution to economic activity in 1996.”
But several housing industry observers blamed inclement weather and the shutdown of the federal government, which delayed the processing of many home loans, for much of December’s drop.
The government shutdown “stopped many home transactions involving the Federal Housing Administration and the Veterans Administration, and it likely made consumers more reluctant about entering the market,” said Art Godi, president of the Realtors group.
“The housing market remains incredibly strong,” with buyers in many areas trading up to larger homes, Godi said.
“A lot of the weakness has been explained away” by weather and other temporary conditions, said Andrew Brenner, senior trader at Nomura Securities International in New York. Other reports also suggest the economy is holding its own. A larger-than-expected 97,000 increase in first-time unemployment claims last week, reported by the Labor Department, was blamed on the Blizzard of ‘96, which closed state employment offices. And the Mortgage Bankers Assn. of America reported applications for new mortgages rose about 9% last week.
The Federal Reserve Bank’s latest “beige book” survey on the economy reported “a slowdown in single-family home sales during December mainly because of seasonal factors,” including the weather.
Economists are mixed on whether the Fed will lower interest rates a notch when its policy-making Federal Open Market Committee meets Tuesday and Wednesday.
By region, December home resales dropped 9.4% in the Northeast, to 580,000; fell 6.5% in the Midwest, to 1 million; declined 1.4% in the South, to 1.430 million; and rose 1.1% in the West, to 890,000.
Elsewhere in its report, the Realtors group said the average nationwide price for a home fell 0.4%, to $113,800 in December from $114,300 in November.
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Existing-Home Sales
Seasonally adjusted annual rate, in millions of units:
Dec. 1995: 3.91
Source: National Assn. of Realtors
