1996 Home Sales Hit 18-Year High But The Year Ended On A Downward Trend

Existing home sales shot up 7.5 percent last year to break an 18-year-old record, but ended 1996 on a downward trend.

Analysts contend housing activity, while remaining strong, apparently has leveled off. The government reported earlier that construction of new homes also fell in December, the third drop in four months.

Sales of existing single-family homes totaled 4.09 million in 1996, the National Association of Realtors said Monday, topping the previous high of 3.99 million set in 1978. There were 3.80 million homes sold in 1995.

Realtors economist John A. Tuccillo attributed the 1996 pace to the economy and favorable interest rates that contributed to affordable conditions.

Thirty-year, fixed-rate mortgages averaged slightly less than 8 percent during 1996, compared with double-digit rates during most of the 1980s.

The monthly payment on a $100,000 mortgage with a 10 percent interest rate is $878, while the payment on the same loan with an 8 percent rate is $734 - a difference of $144.

But sales resumed their downward trend in December, falling 3.5 percent to a seasonally adjusted 3.87 million annual rate after edging up 1 percent a month earlier. November’s advance was the first since last May and many analysts had expected sales to drop back by about the same amount.

Although each of the nation’s four regions shared in the annual advance, only the Northeast registered an increase in December.

“It appears homes sales have topped out,” in part because of slightly higher mortgage rates in recent months, explained David Lereah, an economist with the Mortgage Bankers Association.

“This is the level we’re going to remain at for a while,” he added. “It’s still a very, very healthy level.”

The median price of an existing home was $118,100 in 1996, up from $112,900 a year earlier. The median price was $118,800 in December. The median is the midpoint, meaning half of the homes cost more and half cost less.

Regionally, sales jumped 13.2 percent in the West last year to 912,000, but dropped 7.7 percent in December to an 840,000 annual rate. The median price in 1996 was $152,400.

Sales were up 6.6 percent in the Northeast to 610,000, boosted by a 5.1 percent gain in December to a 620,000 rate. The median price was $140,800.

The South posted a 6.1 percent annual increase to 1.52 million, although sales fell 4.1 percent in December to a 1.40 million rate. The median price was $102,800.

In the Midwest, sales rose 5.5 percent in 1996 despite a 3.8 percent decline in the year’s final month to a 1.01 million rate. The median price was $99,800.