Sales of new homes in June jumped by 8 percent over the May level, only the second rise in seven months, the Commerce Department reported yesterday. Several industry analysts said they were surprised by the size of the increase and it may indicate that the worst of the national housing slump is over.
Lower interest rates were a major factor in the increased sales, according to several economists. Mortgage rates declined in June by about half a percentage point from a peak of 10.67 percent in early May.
"Not much else has changed" in the economy, said David F. Seiders, chief economist for the National Association of Home Builders. Surveys of the association's members "don't really suggest there's any gathering strength to speak of," but they expect sales in the third and fourth quarters of this year to stabilize and perhaps increase a little, he said.
Sales in the Washington metropolitan area followed national patterns, with 987 new single-family homes and town houses sold in June, up from 853 in May and down from 1,387 in June 1989, according to Deborah Rosenstein, president of Housing Data Reports, a survey of industry trends. Her figures are for sales in Howard, Montgomery, Prince George's, Arlington, Fairfax, Loudoun and Prince William counties, Alexandria and the District of Columbia.
The government initially reported only a 0.4 percent rise in sales for May, but later revised the figure to a 2.3 percent gain. Mark Obrinsky, senior economist for the Federal National Mortgage Association (Fannie Mae), said the national average interest on mortgages is just below 10 percent now and "may bounce up and down a little bit for the rest of the year."
Nationally, new home sales in June hit a seasonally adjusted annual rate of 581,000, well above the May rate but still far below the level of June 1989, when the rate was at 646,000, according to the Commerce Department.
The June sales were "the first encouraging sign in a long time that the housing market may be turning around," said Warren Lasko, executive vice president of the Mortgage Bankers Association of America. However, "this is not a solid rebound in the housing sector. It's an 8 percent increase from a very depressingly low level of sales."
At the end of June, about 352,000 new houses were for sale, a seasonably adjusted estimate that would mean a seven-month supply of homes at the present sales pace, the government said. The median sales price was $129,900.
The Northeast sector experienced the biggest jump in sales -- a surge of 36 percent. New home sales rose by 13.6 percent in the South, a huge area including the Washington metropolitan area and stretching south to Florida and west to Texas. Sales dropped by 5.8 percent in the West, including California, and by 4.3 percent in the Midwest.
PERCENT CHANGE IN MONTHLY
SINGLE-FAMILY NEW HOME
SALES; SEASONALLY ADJUSTED
SOURCE: Census Bureau, HUD