Home sales increase 11% in region July rise is attributed to stronger economy, low interest rates

1,853 homes vs. 1,662 in '95

Pending sales contracts for month are up 24%, indicating a trend

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

Encouraged by strength in the economy, buyers of Baltimore-area homes gave the housing market an 11 percent boost in July, the Greater Baltimore Board of Realtors said yesterday.

Sales for the month increased to 1,853, from the 1,662 homes sold in July 1995, the board reported.

"It certainly is a very good sign to see that 11 percent," said Adam Cockey Jr., president of the Board of Realtors. "We've had positive signs with the economy, and the interest rates have been moving but haven't been in the critical range" of 10 percent and above.

The number of pending sales contracts jumped 24 percent for the month to 2,010, an indicator of the direction of future settled sales, the board said.

Sales figures came out the same day that the Federal Home Loan Mortgage Corp., known as Freddie Mac, said that mortgage rates had hit their lowest point in four months.

Thirty-year, fixed-rate loans this week averaged 7.88 percent nationally -- the lowest since a 7.78 percent average for the week ending April 5 and down sharply from 8.23 percent just a week ago, Freddie Mac said.

Average costs of 15-year loans and one-year adjustable rate mortgages also are down from a week ago, to 7.40 percent and 5.89 percent respectively, Freddie Mac said.

A bond market rally on news of lower than expected job growth drove down mortgage rates for the week, said Robert Van Order, chief economist for Freddie Mac.

"At this time, we don't see anything that would change the economic outlook and so are expecting [30-year] interest rates to hover around 8 percent," Van Order said.

In the Baltimore region, average rates have been slightly higher than the national average, with rates on 30-year loans averaging 8.09 percent yesterday, said Keith Gumbinger, of HSH Associates of Butler, N.J. Still, that represented a drop from last week's 8.42 percent, Gumbinger said.

"With the lack of surging growth and a continued subdued inflation environment, interest rates had some room to fall," Gumbinger said.

"It's unlikely at this point that rates are going to continue to fall as sharply as we have had this week. There may be a slow, drifting downward, provided we have the softer growth tenor to the economy we've had over the past six weeks."

With rates expected to remain relatively low, the Baltimore area's trend of monthly sales increases will likely continue, real estate specialists said.

"There's been a nice momentum since the first of this year," Cockey said. "People came out in the early part of the year and started buying, and they've continued to buy."

Sellers, too, have begun to feel more confident about being able to sell their homes, he said.

The board said sales rose across the board in Baltimore and Baltimore, Carroll, Harford and Howard counties, ranging from a high of 34 percent in Carroll to a low of 2 percent in Howard.

At the Eldersburg office of Long & Foster Realtors, sales remained brisk last month, driven in part by workers transferring to the area in search of lower taxes and housing prices, said Joe DeLuca, sales manager.

The average sales price of a home in the Baltimore region increased in July, up 2 percent to $133,818, from last July's $130,780, the board said.

Pub Date: 8/09/96

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