Housing Recovery Shows Continued Strength

Despite slightly higher mortgage rates, the nation’s housing recovery held its ground last month as sales of existing homes remained at the highest level in more than three years, a real estate trade group said Monday.

“The economy is finally moving clearly toward recovery, and we’re feeling it not just in housing but other areas as well,” said Dorcas T. Helfant, president of the Chicago-based National Assn. of Realtors.

Although overall sales fell slightly in California from the preceding month, they were up from March, 1991. The state and national figures are seasonally adjusted while data for individual counties or regions in the state is not adjusted.

The state realtors association reported that Orange County kept pace with other major regions of the state, experiencing a 33.4% increase in home resale activity from February to March. Home sales likewise were up from March of 1991--by 3.8%

This latest rise in Orange County home resales marks the seventh consecutive month in which there has been an increase from the previous year’s corresponding month. It is the longest back-to-back string of increases since the end of the housing boom in mid-1989.

Nationally, the association said existing homes sold at a rate of 3.49 million units nationwide in March, unchanged from the February level.

Although last month’s sales fell slightly in California after an unusually strong February, analysts were impressed that existing home sales remained 5.2% higher than a year ago when home sales began heating up after the end of the Persian Gulf War.

“Our offices have definitely shown increases,” said James M. Righeimer, a broker with ERA Rafferty & Lloyd in Fountain Valley. He attributed the March boost to a combination of lower interest rates and a dip in housing prices from last year.

The median price of existing homes sold last month in Orange County was $238,160, up 3.1% from February and down 0.2% from March of 1991. Median prices reflect the price range of houses sold rather than actual changes in the cost of a standard home.

“It shows that there are more move-up buyers in the market, which is a sign of an improving economy,” Righeimer said. “No one who already owns a $250,000 home has to buy a $350,000 new home. Move-up sales are a great indication of consumer confidence.”

Many of his clients have expressed a sense that companies have laid off all of the employees they are going to lay off, he said. “People are beginning to think that their jobs are secure, whereas a year ago they didn’t know,” he said.

Los Angeles County posted figures similar to Orange County’s. Sales activity jumped 34.4% from February, and 3.6% from March of 1991. The median price of homes sold in March was $222,540, up 4.4% from February and 3.3% from March of 1991.

Housing experts were heartened that volatile fixed mortgage rates in recent months have not had a roller-coaster effect on housing sales.

“The rise in rates probably got people to thinking that they’ve seen the bottom and they better act fast” to buy a house, said James Z. Pugash, director of Montgomery Securities Real Estate in San Francisco. “When rates are real low, a slight rise can sometimes spur sales.”

Analysts believe that the current housing sales pace can be sustained unless mortgage rates rise substantially. Nationally, 30-year fixed mortgage rates stood at 8.93% last week, after rising as high as 9.03% in March, according to HSH Associates, a Butler, N.J.-based publisher of mortgage information. Most analysts believe that mortgage rates will remain around the 9% level for the remainder of the year.

“The economy is coming along; things look very encouraging,” said Daryl Delano, an economist at Cahners Economics in Newton, Mass.

The National Assn. of Realtors is forecasting a 7.2% rise in existing homes sales this year. Resales totaled 3.22 million in 1991.

The National Assn. of Home Builders projects that new home construction will increase 26% this year. But California will have a somewhat less robust 14.3% increase, according to the Construction Industry Research Board in Burbank.

The northeastern United States posted the biggest increase in existing-home sales from February to March, of 12.2% to an annual rate of 550,000 units. The median price in the Northeast was $145,000, up 2.5% from a year ago.

Sales were up 1.6% in March to 1.27 million in the South, where the median price was up 6% to $92,300.

But sales fell 6.1% to 920,000 units in the once red-hot Midwest, where the median price was up 3.6% to $81,000. Sales also slipped in the West, down 2.6% to 740,000 units. The median price there was down 2%, to $143,200.

Roller-Coaster Housing Prices After a two-month dip in resale housing prices, the market improved last month. The median price of existing homes hit $238,160, up 3.1% from February. That, however, is the lowest March median price since 1988, when the figure reached a then-high of $193,563. Median resale price of an Orange County home: March 1992: $238,160 Source: California Assn. of Realtors