Home sales in the area jumped 27% last month

June 07, 1994|By Lorraine Mirabella | Lorraine Mirabella,Sun Staff Writer

With a recent increase in interest rates prodding homebuyers to get their best deal on a mortgage, home sales in metropolitan Baltimore jumped in May by the largest percentage in nearly a year and a half.

But higher rates, which push monthly payments up, have begun to slow the rush of first-time homebuyers.

Overall, the number of new and existing-home sales last month rose 27 percent, compared with May 1993, the Greater Baltimore Board of Realtors said yesterday.

Most of the increase in May stemmed from deals that had been signed in March, a record month for many real estate companies locally. Many firms had seen a surge of buyers trying to beat rising interest rates, as well as pent-up demand from buyers kept indoors by harsh weather in January and February.

Long-term fixed mortgage rates climbed to 8.66 percent last week from below 7 percent late last summer.

"When the people holding back saw the rates going up, they got off the fence and started writing contracts," said Nancy C. Hubble, president of the Greater Baltimore Board of Realtors. "These are still good rates."

The sense of urgency that spawned the March surge can still be found in consumers, who are more confident and better able to afford homes thanks to low rates, said Patrick Kane, vice president of Coldwell Banker/Grempler.

"There's still a lot of fear in what the government is going to do with these interest rates, overreacting in trying to raise them," Mr. Kane said, referring to the Federal Reserve's four recent short-term rate increases.

The number of homes that went to settlement in Baltimore and Baltimore, Howard, Harford and Carroll counties rose to 1,775, from 1,408 in May 1993. Sales increased in each county but remained level in the city, the Realtors board reported.

Settled sales for the first five months were up 15 percent compared with a year ago. And the average price of a home rose 8 percent, to $131,904 from $122,038 last May.

But while higher mortgage rates have led many to step up their search for a new home, they have also begun to dampen the market slightly, real estate agents said.

The number of pending sales -- those remaining under contract -- has been down slightly for the past two months, according to the figures.

In May, the number of pending sales decreased to 1,704, or 1 percent, compared with last May, leading to an expected decline in the number of home settlements in two to three months.

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