Sales of new homes plummet 13%

November 03, 1994|By Lorraine Mirabella | Lorraine Mirabella,Sun Staff Writer

Baltimore's new-homes market took a heavy hit during the third quarter, thanks to rising interest rates and weakened consumer confidence that has kept this year's sales dragging behind last year's.

Sales of new homes in the region plunged 13 percent during July, August and September compared with last year, Legg Mason Realty Group Inc. said in a quarterly report released yesterday. Sales for the first nine months fell to 7,330, down 10 percent from the first three quarters of 1993, the report said.

"The interest-rate increases had a detrimental effect on the entry-level products, knocking out a segment of the population that could [previously] afford them," said Robert M. Lefenfeld, Realty Group senior vice president. "And on the higher end, we saw a deterioration of consumer confidence, which hit a two-year high in June and the last three months has been going farther and farther down," keeping discretionary buyers of move-up homes out of the market, he said.

Those factors also hurt sales from southern New Jersey to Northern Virginia, Legg Mason said. Third-quarter sales were off a fairly uniform 15 percent throughout those states, a reflection of an economic recovery that has lagged behind other parts of the country, Mr. Lefenfeld said.

Anne Arundel and Carroll counties saw the sharpest sales drops -- from 703 to 460 in Anne Arundel and from 271 to 157 in Carroll, the report said. But both had experienced unusually heavy building booms last year, Mr. Lefenfeld said.

The Odenton/Crofton area, in Anne Arundel County, and Northwest Baltimore County captured the greatest shares of the region's new home sales -- 14.2 percent and 12.2 percent respectively.

"Building is slowing down in all counties, but those are two areas that still have some inventory left and have a lot of variety of product type, which attracts a variety of buyers," Mr. Lefenfeld said.

Legg Mason reported average base prices of $147,100 for townhouses, $109,700 for condominiums and $237,000 for single-family homes, with builders offering an average $4,843 in incentives to help sell their products.

While multifamily unit sales increased 5 percent over the first nine months, townhouse sales fell 4 percent and single-family sales dropped 18 percent, Legg Mason said.

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