New-home sales in the Baltimore area rose 14 percent in the fourth quarter of last year, bolstering the claims of housing specialists that a modest rebound in the local market may be under way.
"What we're seeing is the first shot at true recovery, and hopefully the first quarter will see sales really start to improve even more," said Bob Lefenfeld, vice president of the Legg Mason Realty Group Inc., which tracks the regional housing market for builders, developers and financial institutions.
Spurred by a strong first quarter last year and increased home buyer interest resulting from lower interest rates in the fourth quarter, new-home sales in the Baltimore area reached 9,487 units during 1991. Last year's sales were up 15 percent from the 1990 total of 8,232 units. Sales were especially strong in Anne Arundel County.
"The buyers are coming out in great numbers. The traffic is probably the best we've seen in two years at our sales centers, and it's quality traffic," said L. Earl Arminger, head of Orchard Development, a Columbia-based developer of residential property.
Area homebuilders and developers agreed that the fourth quarter is an indication of better times ahead for the homebuilding industry.
"This is the beginning of the turning of the tide -- with interest rates having fallen and home prices being good," said Marty Hill, president of Masonry Contractors, a homebuilding firm based in Carroll County.
Still, builders allow that the recovery is tentative and that it will be restrained due to consumer uncertainty about the nation's economy. They say two forces are battling each other as consumers debate whether to purchase a new home. On the one hand, they're highly motivated by low mortgage rates and, on the other hand, they are still influenced by a fear of losing their jobs.
"It's sincerely hoped that the increase in sales activity in the fourth quarter is a sign of a rebound that will continue. But many consumers are skittish. They're afraid to make a move for the purchase of their lives now for fear that a spouse would lose their job and they'd lose the house they just purchased," said Gary Blucher, a vice president of the Home Builders Association of Maryland.
Nationwide, sales of existing homes were nearly flat in the fourth quarter and prices fell, a real estate group said yesterday in a report suggesting that a recovery in the housing sector stalled at the end of last year, Reuters reported yesterday.
Sales of existing homes edged up slightly to an annual rate of 3.57 million in the fourth quarter from 3.55 million in the third quarter.
Home sales appear to have bottomed out at a rate of about 3.4 million units in late 1990 and early 1991.
Meanwhile, the median price of a home sold in the fourth quarter fell to $99,000 from $101,900 in the third quarter, but that was still a 7.4 percent increase from the $92,200 median price posted in last year's fourth quarter.
In Baltimore, the median price rose 10.8 percent to $113,300, the Associated Press reported.
The median price, the midpoint of prices for all homes sold, is considered the best gauge of price trends.
Legg Mason, which tracks sales of new town homes, detached homes, and condominiums and apartments in the Baltimore area, reported the fourth-quarter sale of 1,786 housing units in 1991, surpassing sales for the same quarter in 1990 by 14 percent.
The percentage improvement from the third quarter of 1990 to the same quarter of 1991 was greater than the increase for the fourth quarter. But Mr. Lefenfeld said that, rather than indicating a dip at the end of last year, "that was because the third quarter of 1990 was the pits."
"Builders who watch the industry feel that things should get much better. But they think there's going to be a gradual increase. This recovery is not going to skyrocket," said Mr. Blucher, a residential developer in Carroll and Harford counties.
Many builders and developers believe that home-buyer fears about the economy are already easing. But they say a recovery in new-home sales will be restrained this year by the realities of demographics and the fact that many baby-boom-era adults in this country have already acquired homes.
"All the baby boomers are grown up. And until the children of the baby boomers grow up, you're not going to see a rebound like it was in the '80s," Mr. Blucher said.
Much of the increase in new-home sales is in Anne Arundel County, where the opening of so-called planned communities has stimulated home sales in the Crofton and Odenton areas, Legg Mason's Mr. Lefenfeld said. Anne Arundel's planned communities include Russett Center, Seven Oaks and Piney Orchard.
Also benefiting from increased home-buyer interest in planned developments are Owings Mills Newtown and Mays Chapel North in Baltimore County, and Riverside in Harford County. "On an annual basis, the [planned communities] accounted for 9 percent of sales," Mr. Lefenfeld said.