Area housing market stronger in first quarter

May 21, 1994|By Lorraine Mirabella | Lorraine Mirabella,Sun Staff Writer

Despite harsh weather and rising interest rates, the Baltimore region's housing market grew stronger during the first three months of the year, signaling continuing improvement for the local economy, the U.S. Department of Housing and Urban Development said in a report released yesterday.

In a look at the national housing market compared with the first three months of 1993, HUD economists said home sales and construction have improved markedly, based on statistics gathered from state and local governments and housing industry sources in 10 regions.

Nationally, construction starts of new homes jumped 17 percent, while sales of new single-family homes were up 13 percent and resales rose 14 percent, HUD reported.

"We have yet to see rising interest rates restrain production in any serious way," said Michael Stegman, assistant secretary for policy development and research, during a press briefing at HUD's Washington headquarters.

Fixed rates on 30-year mortgages, which had jumped from below 7 percent to near 9 percent since last August, dipped to 8.56 percent over the past week. Mr. Stegman noted that level still is lower than during any month from 1974 to 1991. He predicted rising rates would lead only to slight declines in affordability.

"We are concerned about the impact on first-time homebuyers, but we're encouraged by the reduction in long-term rates that occurred this week," he said. "There seems to be a growing confidence in the market that long-term rates seem to be under control."

In metropolitan Baltimore, sales of previously owned homes increased 10 percent during the first quarter, though new home sales fell 3 percent, compared with the same months last year.

Rather than hurting sales in the Baltimore area, rising rates have spurred buyers to act on home purchases before rates get higher, said Nancy C. Hubble, president of the Greater Baltimore Board of Realtors.

"At some point [higher rates] will hurt, but we're still single digit," Mrs. Hubble said, adding that she expects buyers to settle for more affordable homes rather than stay out of the market altogether.

"People feel more confident about their jobs," said Larry Cates, a spokesman with Ryland Homes, which reported a 27 percent overall increase in sales during the first three months of 1994.

Rising rates haven't hurt affordability "to the point of pushing sales off the mark," he said.

"People are still out there buying homes."

The HUD report also showed homeowners to be more heavily mortgaged than they used to be because of an explosion in home prices during the 1970s.

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