February New-Home Sales Up 6.2%, Best in 5 Months

March 30, 1985|Associated Press

WASHINGTON — Sales of new single-family homes rose 6.2% in February, the biggest gain in five months, the government reported Friday.

Sales were put at a seasonally adjusted annual rate of 638,000 last month following a slight 0.5% decline in January, according to the report by the Commerce Department and the Department of Housing and Urban Development.

The January decline originally was reported as a 2.6% increase.

The average price of a new home was also up last month, rising 3.5% to break through the $100,000 mark for the first time since last November.

Analysts credited much of the sales gain to lower interest rates. Fixed-rate mortgages averaged 13.47% in early February, down from 13.66%. It marked the seventh consecutive monthly decline since rates peaked at 15.2% last July, according to a report by the Federal Home Loan Bank Board.

"Potential buyers found the market to their liking. Rates had been headed down and they reached the point where buyers did not expect them to go much lower," said Warren Lasko, executive vice president of the Mortgage Bankers Assn.

Mark Riedy, president of the Federal National Mortgage Assn., said mortgage rates have increased by about 1 percentage point in recent weeks.

He said that, while this could constrict sales in March and April, he expected that mortgage rates will soon start declining again.

"Mortgage rates were heading up fairly rapidly in the first part of last year and scaring people off during the peak buying season, but this year I expect to see rates declining," Riedy said.

Jack Carlson, chief economist for the National Assn. of Realtors, forecast that new-home sales for all of 1985 would total 664,000, up 3.9% from 1984.

He predicted that sales of previously owned homes, which dropped 2.7% in February, would increase even more rapidly this year, to 3.2 million units, up 11% from last year.

The report on new-home sales said the February increase was powered by a 15% jump in sales in the South. Sales showed much smaller increases of 1.1% in the Northeast and 0.6% in the West. Sales in the Midwest dropped a sharp 10%.

The average price of a home rose to $101,300 in February, compared to $97,900 in January.

The median price of a home was $83,100 in February, compared to $82,600 in January. The median price means that half of the homes sold for more and half for less.

The average home price was 7.3% above where it was a year ago. Michael Sumichrast, chief economist for the National Assn. of Home Builders, said that this reflected, in part, a sharp increase in land prices and the fact that new homes are somewhat larger than a year ago.

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