Home sales in region post 6% gain Increase is smaller than in recent months

July 09, 1996|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Home sales in the Baltimore region rose 6 percent in June, a slight increase compared with gains in recent months but a healthy sign in a climate of higher mortgage rates, the Greater Baltimore Board of Realtors said yesterday.

For the month, 1,902 homes sold in Baltimore and Baltimore, Howard, Harford and Carroll counties, compared with 1,789 sales in June 1995, the board said.

The sales increase fell far short of the board's reported gains of 29 percent in May and 35 percent in April. The number of contract signings, which indicate coming sales, climbed 12 percent in June but failed to keep pace with increases of 40 percent in April and 28 percent in May.

"It's been such a strange, topsy-turvy market for the last couple of months," said Patrick J. Kane, vice president of Coldwell Banker Grempler Realty Inc. "It's been hard to figure out what's going on."

He said his agency's June sales were in line with the regional average.

Analysts said June's smaller increase indicates that pent-up demand for housing is waning.

"You have to keep in mind that the home sales market got off to a slow start this year so all that pent-up demand made for a very active spring selling season, compared to last year's," said Michael Funk, assistant director of the Regional Economic Studies Institute at Towson State University.

"If you look at home sales growth in June, as compared to home sales growth earlier in the spring, it's unreasonable to expect that pace to continue," he said.

The smaller increase also is a likely result of higher interest rates, said Keith Gumbinger, a mortgage analyst with HSH Associates of Butler, N.J.

"Last year at this time, interest rates were falling," he said. "Last year's market was getting better. It's harder to have increases this year.

"Rates are substantially higher this year than last, and yet there's an improvement in sales. That speaks to the overall health of the economy."

In June 1995, rates on 30-year, fixed loans averaged 7.79 percent, he said. By last month, average rates on 30-year loans had risen to 8.50 percent.

Friday, in the Baltimore market, rates averaged 8.29 percent.

Gumbinger predicted they will rise to around 8.68 percent this week because of last week's bond market sell-off.

The Realtors' monthly statistics showed sales increases everywhere in the region but in Baltimore city, where sales fell 9 percent.

Increases ranged from 9 percent in Baltimore and Harford counties to 24 percent in Howard County.

Pat Hiban, an associate broker with Re/Max Advantage Realty in Columbia, said most of his June sales were in the $150,000 range.

Buyers tended to purchase either executive-style townhouses less than five years old, with garages and gourmet kitchens, or single-family homes without high-priced upgrades.

In the region, the average sales price rose 6 percent in June to $138,164.

Sales during the first half of the year were up 19 percent, compared with the first six months of 1995, the board said.

"I don't think there's any reason to expect a particularly robust real estate market in the second half of 1996," Funk said.

"I don't think rates will come down very much. On balance, 1996 is going to be a better year for residential real estate than 1995, but only by a small percentage."

Pub Date: 7/09/96

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