Metro home sales rise 29% Buyers less worried about job security

June 08, 1996|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Consumers feeling confident about jobs and trying to beat rising mortgage rates boosted home sales in the Baltimore region 29 percent in May, continuing a string of monthly improvements, the Greater Baltimore Board of Realtors said yesterday.

For the month, 1,907 homes sold in the region, up from 1,482 last May, the board said.

Sales on a year-to-year basis have gained for nine straight months, with the largest increase 35 percent in April compared with April 1995, the figures show.

"The consistent rise in residential sales is a positive sign for the industry," said Christine A. Vasiliou, the board's executive vice president.

Improved job security has filtered down to the housing market, she said, and some buyers have been motivated to purchase before mortgage rates rise further.

Rates on 30-year fixed mortgages averaged 8.39 percent in the Baltimore area as of Thursday, up from 8.17 percent the previous week, according to HSH Associates of Butler, N.J., which tracks rates by region.

Sales increases ranged from 17 percent in Howard County to 44 percent in Harford County. The region-wide figures also reflect sales in Baltimore and Carroll counties and in Baltimore City.

Contract signings -- an indicator of future sales -- rose 28 percent, the board said.

"It's really a hubbub out there. It's a busy, busy time," said James P. O'Conor, chairman of O'Conor Piper & Flynn Realtors. "I don't think anybody anticipated the market to be as strong as it has been."

He attributed the strength to favorable mortgage terms and a large supply of homes for sale in the market. As of the end of the month, 14,651 homes in the region appeared for sale on the Realtors multiple listing service, including the 4,961 added to the mix in May, the board's survey showed.

As buyer interest picks up, homes remain on the market for shorter periods, O'Conor said.

"We're also seeing that it's not uncommon to find two or three people who are interested in a property," he said. "If homes are priced reasonably well and close to market value, they're going to move along."

Interest rates have risen more than a full percentage point this year. But rates still are perceived as affordable by historic standards because they fall below the 10 percent range, said Keith Gumbinger, an analyst with HSH.

Also as the gap has widened between rates for 30-year loans and variable loans, more consumers have opted for one-year adjustable-rate loans, he said. That way, borrowers can guarantee a lower rate than the current 30-year rates for at least two years -- even if rates adjust upward by the maximum, he said.

"With tax refunds and a better jobs picture and considerable wealth realized in gains in the stock market -- all of these factors contribute to people purchasing homes. And the fact that prices haven't skyrocketed does help."

Prices have remained fairly stable in the Baltimore region, with the average dollar sale in May up 3 percent to $128,963, compared with last May, the board said.

Pub Date: 6/08/96

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