Terror attacks cast pall over existing-home sales

U.S. drop in Sept. was 11.7%

Balto. area bucks the trend

October 26, 2001|By Robert Nusgart | Robert Nusgart,SUN STAFF

Sue Pakulla was used to the bustling atmosphere of managing the Columbia office of O'Conor, Piper & Flynn ERA at a time when home sales in Howard County seemed as brisk as ever.

And then it all stopped on Sept. 11.

As the horror of that day unfolded, when terrorist attacks in Washington and New York stunned America, she knew the days to come would be unlike any that she had seen.

"I had a difficult time, pulling people back in, away from their TV," Pakulla said. "They were all glued to their TVs, and that had a major impact on our business at that point because not only were my agents glued, but so were people who were looking to buy houses."

P. Wesley Foster, president of Long & Foster Real Estate Inc., the fourth-largest brokerage in the country, could sense the pall cast during that week.

"People were stunned for seven to 10 days. People weren't looking, and certainly buying was down," Foster said. "There was a shock value, but people seemed to recover."

Like a paralyzing shot to the solar plexus, the week of Sept. 11 took its toll on American business, and sales of existing homes nationwide were no exception.

According to the National Association of Realtors, that week was a major factor in causing resales of single-family homes to fall 11.7 percent to a seasonally adjusted annual rate of 4.89 million units in September.

Those figures, which were released yesterday, meant a drop from a revised pace of 5.54 million units in August, which was an all-time record. When compared with August last year, sales declined 5.2 percent from an annual pace of 5.16 million units.

Locally, sales of existing homes fared better, as September sales in the Baltimore metropolitan area rose 2.71 percent over September 2000.

Realtors typically gauge activity by the sound of phones ringing in an office. But as that Tuesday turned to Wednesday, most real estate offices were eerily silent.

"That week of the 11th, things were real slow," said Judy Curren, manager of the Frederick office for O'Conor, Piper & Flynn ERA. "It was really quiet in here. Agents weren't around. The phones weren't ringing."

David Lereah, chief economist for the NAR, said, "Considering the nation essentially came to a halt during the week of the attack, we knew there would be a hit on home sales activity."

But in the Baltimore-Washington area, the fears that business would not return began to wane by week's end. Realtors, though, wondered if buyers would return to the market with the same zeal they had seen prior to Sept. 11.

"By and large, the general public, although cautious, they are still out there," Curren said. "They really haven't changed their plans."

Said Foster: "It's just surprising. I would have thought after Sept. 11, that we would have gone down significantly. But we haven't. We may still, but so far we haven't."

Foster said that, so far this month, Long & Foster's sales are running 11 percent ahead of October 2000.

Nationally, Lereah said that the tracking of several major brokerages by NAR is showing that sales activity is "making some recovery," which means the "underlying demand and fundamentals of the market remain strong."

NAR is projecting total sales nationwide to finish at 5.19 million units, an increase of 1.3 percent over 2000, which would make it the second-highest total for existing home sales ever.

One of the reasons home sales were able to recover is that fixed-rate mortgages have fallen to their lowest levels in 30 years, hovering at 6.5 percent or below.

"We have had some activity and sales from people who probably would not have considered buying. But that is just something that we have just tapped into," Curren said.

However, she remains wary that the demand she's seeing now is from people who were already in a mind-set to buy.

"Maybe we haven't seen the impact of the people who weren't in the market yet, but who were getting ready and [then decided] not to go forward," Curren said. "I don't think we will know that for a few more weeks."

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