Rising interest rates battered the state housing market for the fourth straight month in October, the Maryland Association of Realtors said yesterday, as sales plunged 17 percent.
Throughout Maryland, 3,395 new and resale homes sold, compared with 4,074 last October, with declines reported in all but four counties, the association said. Only Baltimore City reported significantly higher sales.
Real estate brokers blamed rising rates coupled with job uncertainty. They also noted that homeowners who refinanced loans at rock-bottom rates last year are staying put now.
"We've been seeing the effect for three or four months now," said James P. O'Conor, chairman of Timonium-based O'Conor, Piper & Flynn Realtors. "The October figures are not new news. It's the continuation of a soft market.
October's decline followed drops in sales of 14 percent in September, 5 percent in August and 9 percent for July.
The average rate on 30-year fixed mortgages in the Baltimore region rose to 9.36 percent for the week ended yesterday, according to HSH Associates, a New Jersey firm that tracks mortgage rates in the Baltimore area. Rates have climbed steadily all year, after a recent low of 6.83 percent in October 1993.
Each increase knocks another wave of would-be buyers out of the market, brokers said.
"Our market is driven very much by interest rates and the availability of property," Mr. O'Conor said. "One or the other will affect it."
The October sales figures also show that the number of pending sales contracts in the state took a 20 percent dive in October, roughly indicating the number of sales that will reach settlement two months later.
Mr. O'Conor noted that those figures don't reflect the latest of six short-term interest rate increases this year. To slow the economy and control inflation, the Federal Reserve raised rates three-fourths of a point Nov. 15. "We're waiting to see what that last increase is going to do," Mr. O'Conor said.
While home sales declined in most regions and rose slightly or were flat in Calvert, Somerset, Wicomico and Kent counties, Baltimore City bucked the trend. Sales there climbed 13 percent.
William F. Cassidy, a Long & Foster Real Estate Inc. sales manager whose office serves much of the city south of Cold Spring Lane, said government-backed programs that offer help with closing costs or low-rate mortgages have sparked interest among buyers. Additionally, sellers have cut asking prices.
"Prices have dropped in so many areas of the city in the last year to the point where there are so many glaring bargains," he said.
The average price of a home in the city fell to $71,287 in October, compared with $75,108 last October. Statewide, the average home price rose from $128,241 to $135,088.
As rising rates have lessened demand for new homes, some builders have offered special incentives to buyers -- and even to real estate brokers -- to help sell those homes.
Washington Homes Inc., which builds single-family homes, townhouses and condominiums in Owings Mills and Anne Arundel County, gives buyers flexibility in locking into a rate on loans through the company's mortgage subsidiary.
The company also has started a program to offer trips to real estate brokers who sell its homes, said Judith Sylk-Siegel of The Financial Relations Board Inc., which represents the builder.