Home sales decline for first time in '96 5% drop in Oct. offset by rise in pending deals

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

Marking the first decline this year for the local housing market, sales in October dipped slightly, by 5 percent, the Greater Baltimore Board of Realtors said yesterday.

For the month, 1,523 homes were sold in a region that includes Baltimore and the counties of Baltimore, Howard, Harford and Carroll. That compared with 1,599 sales of existing and new homes in the same period last year, the board said.

Sales have climbed each month, compared with the same month a year earlier, since January -- by as much as 35 percent in April -- board statistics show. Monthly sales have ranged from a low of 852 homes in February to a high of just more than 1,900 in May and again in June.

In October, sales fell by as little as 3 percent in Baltimore County and by as much as 15 percent in Harford County, with Howard County posting no change from the same period in 1995, the board said.

"Although October statistics reflect a minute decrease in sales

activity, we find the 10 percent increase in pending units to be an encouraging sign," said M. Gayle Briscoe, vice president of Otis Warren Real Estate Services and board president as of last month.

Pending sales -- represented by signed contracts awaiting settlement -- jumped from 1,541 in October 1995 to 1,689 last month, the board said.

"Consumer confidence is still on the rise, and as the season changes we anticipate steady numbers," Briscoe said.

The drop in sales comes amid a weakening of the economy during the second half of the year, said Michael Funk, assistant director of the Regional Economic Studies Institute at Towson State University. "We can see that in other areas of the retail sector, too," he said. "New-auto sales have been down. I don't think it's the start of a major decline."

Rising mortgage interest rates over the past three months also have played a role, he said.

The average cost of a 30-year, fixed-rate loan had dropped to about 7 percent over the summer, before climbing to more than 8 percent.

More recently, rates have started to slip back down. As of Thursday, interest rates averaged 7.67 percent for 30-year loans, 7.20 percent for 15-year loans and 5.56 percent for variable-rate mortgages, according to the Federal Home Loan Mortgage Corp.

"If anything, interest rates are going to ease up because of the softness in the economy nationally," Funk said. "If that persists, rates should come down, which should help the real estate market."

Sales have increased most of this year, but the market suffered early in the year when snowstorms kept potential buyers away, he said. For the rest of the year, "I wouldn't expect anything dramatic in the real estate market either way, maybe down in November and December by a small percentage," he said. "In 1997, it almost certainly will improve."

The average selling price of the homes sold in October rose 4 percent, to $132,120, compared with October 1995, the board reported.

That could indicate fewer purchases at lower prices, where buyers are more sensitive to increases in mortgage costs, Funk said.

Pub Date: 11/09/96

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