Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, January 26, 1995 TAG: 9501260095
SECTION: BUSINESS PAGE: B8 EDITION: METRO
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: Medium
The number of down payments on existing homes began dropping substantially in October, suggesting that lower sales figures starting this quarter, the National Association of Realtors said Wednesday. Contract closings often trail initial deposits by several months.
``My guess is that we'll see in February and March that something has gone haywire in the real estate industry,'' Realtors President Edmund G. Woods Jr. told reporters at a briefing.
Existing-home sales totaled 3.97 million last year, up 4.3 percent from 1993's 3.8 million and second only to 3.98 million in 1978, the real estate group said. All regions posted gains.
Sales also rose 1.8 percent in December, to a seasonally adjusted annual rate of 3.89 million from 3.82 million a month earlier.
``Those are the best numbers we're going to see for a while,'' predicted John A. Tuccillo, the organization's chief economist.
Mortgage rates rose last year from less than 7 percent in February to more than 9 percent last month. An increase from 7 percent to 9 percent would add $209 to the monthly payment on a $150,000 mortgage.
The Federal Reserve, which boosted short-term interest rates six times last year to keep inflation in check, meets again next week to consider monetary policy. Most analysts expect further rate increases.
Economists noted that many buyers switched from fixed-rate mortgages to less expensive adjustable-rate loans as rates rose. In addition, growing jobs and incomes offset the higher borrowing costs in many cases.
Although fixed-rate mortgages were more costly, the price of existing homes remained relatively stable last year. The median price was $107,700 last month, compared to $107,400 a year earlier. The median is the midpoint, meaning that half of the homes cost more and half cost less.
by CNB