
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, March 26, 1994                   TAG: 9403260029
SECTION: BUSINESS                    PAGE: A-6   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

HOME RESALES REFLECT THOSE WINTER'S-HERE-FOREVER BLUES

Winter weather and rising mortgage rates slowed sales of previously owned homes in February, but analysts said housing activity will remain strong.

The National Association of Realtors said Friday that sales fell 9.9 percent last month, to a rate of 3.83 million a year, lowest since 3.70 million last June. Sales were off in every region in the nation.

But Realtors President Robert H. Elrod contended the loss should be viewed in the context of following the highest sales rates on record in December and January. Sales shot up to a 4.35 million annual rate at year's end before slipping to 4.25 million as 1994 began.

"We anticipate any loss in terms of market activity because of adverse natural conditions will be made up later in the year . . . 1994 still has the potential to be a record-breaking year for home sales," he said.

Despite the drop in February, sales remained 10.4 percent above the 3.47 million rate of a year earlier. And the 3.83 million rate was higher than the 3.8 million total sales in 1993.

"January and February, in my mind, were just a pause due to really cruel weather," contended economist David Lereah of the Mortgage Bankers Association. "Once we see spring, I think we will see some pickup in activity."

Still, "rising rates definitely are starting to take effect," Lereah acknowledged. "I still believe the housing market will be relatively strong because the economy is strong, but higher rates are starting to be felt."

Fixed-rate, 30-year mortgages averaged 7.15 percent in February, up from 7.07 percent in January and a 25-year low of 6.74 percent in October, according to the Federal Home Loan Mortgage Corp.

Rates reached 7.8 percent this week, and many economists believe they could hit 8 percent by year's end. If so, it would mean an increase from $665 to $733 in the monthly principal and interest payment on a $100,000 mortgage.

The median price of a previously owned home dipped 0.9 percent in February, to $106,900 from $107,900 in January. That indicated first-time buyers dominated the February market, the Realtors said. The median is the midpoint, meaning that half of the homes cost more and half cost less.

In the South, where the median price was off 0.4 percent to $95,400, sales dropped 9.6 percent, to a 1.42 million rate.

by CNB