Home Sales Fall 2.2%; Mortgage Rate Hikes, January Lull Cited

WASHINGTON —  Sales of existing homes fell 2.2% last month, pulled down by higher mortgage interest rates combined with the usual January buying lull, a real estate trade group reported today.

The National Assn. of Realtors said January sales totaled a seasonally adjusted annual rate of 3.48 million units, the slowest since last August’s 3.44-million rate.

Interest rates rose from 9.83% to 10.05% last month.

“The rate rise made a dent in high-end and less expensive markets,” said Norman D. Flynn, realtors president; he also noted that the beginning of a year is generally a slow home sales period.

The association’s chief economist, John A. Tuccillo, said a big increase in sales is unlikely in the coming months because of the mortgage rates but added that “as rates taper off in the spring, we expect sales to pick up, mainly in markets offering moderately priced homes.”

The national median price for existing single-family homes last month was $96,200, up 4% from December and 7.1% from January, 1989. The median means half the homes cost more, half less.

The South was the only region posting an increase in sales in January, up 0.7% to 1.40 million units. The median price there was $86,300.

The biggest decline in sales was in the West, where the 540,000-unit pace was 11.5% below the December rate. The median price was $144,000, up 7% from a year ago but a smaller increase than recent annual price hikes in the region.

“The high priced, high-volume markets on California’s West Coast cooled down,” Tuccillo said.

Sales in the Northeast were down 3.4% to 560,000 units. The median price there was $147,100, prompting Tuccillo to observe that “high-cost areas in the Northeast remain sluggish and this likely will continue through the year.”