Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, February 1, 1991 TAG: 9102010372
SECTION: BUSINESS PAGE: B4 EDITION: METRO
SOURCE: From staff and wire reports
DATELINE: LENGTH: Medium
New-home sales were down 6.7 percent, the government said Wednesday. But analysts suggested a gradual recovery will begin by midyear.
The Departments of Commerce and Housing and Urban Development reported new-home sales in December 1990 fell for the second consecutive year, down 17.5 percent to 536,000 units, the smallest number since 412,000 homes were sold in August 1982.
And the new numbers underscore weakness in the real estate market logged last week when the National Association of Realtors reported that sales of previously owned homes fell 4.3 percent in 1990 to 3.29 million units, their lowest level in five years.
In Virginia, where sales figures include both new and older homes, 1990 sales were off 15 percent for December and 11 percent for the year. Only five of the 24 multiple-listing service areas in the state showed a gain in sales over 1989, according to statistics released this week by the Virginia Association of Realtors.
Gains occurred in Winchester-Front Royal, Charlottesville, Loudoun County, the Northern Neck and Williamsburg. Harrisonburg-Rockingham County sales were even with those in 1989.
Roanoke Valley's 1990 sales were down 32 percent for the month and 15 percent for the year. Sales were off 11 percent for the year in the New River Valley and 25 percent in the Martinsville-Henry County area.
The December drop was less, however, than that in summer and early fall. Sales were off 24 percent in November against November 1989, said the VAR.
John Bagby III, president of the VAR, said he hopes the worst of the slump is coming to an end in Virginia.
Analysts attributed the December sales loss nationally to faltering consumer confidence. Some also took solace in a Conference Board survey that found confidence returning recently after tumbling immediately after the outbreak of the Persian Gulf war to its lowest level in 10 years.
"It's clear the weakness in December was not an interest-rate issue," said economist David Seiders of the National Association of Home Builders, who noted that mortgage rates had fallen to nearly 9.5 percent in December.
"The explanation has to lie in the extreme lack of consumer confidence," concurred Thomas Holloway, an economist with the Mortgage Bankers Association. "The consumer is concerned over the outlook for the economy - inflation and incomes. In large part, that stemmed from developments in the Middle East."
Many analysts believe the contraction in the housing industry will reach bottom during the current quarter, although sales could fall another notch in January.
"Interest rates will come down farther," Seiders said, which will help the market "pull out of this in the first quarter and have a gradual recovery."
"When we look at this report in conjunction with other recent economic reports, if we're not at the bottom, we're very close," Holloway said.
He added that "there here was some anecdotal evidence at the end of January" that consumer confidence was improving and that, together with declining mortgage rates, "hopefully will bring some buyers off the sidelines."
by CNB