As home sales plummeted over the past nine months, economists and real estate experts blamed the fall on rising interest rates.
But rates have fallen by almost a full percentage point over the last three months, yet the market is still in the doldrums.
"Interest rates are important for housing, but they're not the only thing," said David W. Berson, chief economist at the Federal National Mortgage Association. "In many cases they're not even the most important."
As important to the real estate market is the economy, which has been weak and is expected to get weaker by the end of the year. Buyers worried about their jobs -- or their salaries -- are hesitant to buy homes.
As Edmund G. Woods Jr., the president of the National Association of Realtors, puts it in a recent prepared statement: "If you think there's a chance you might be out of work, mortgage rates can't fall low enough to convince you to buy."
Rates on 30-year fixed mortgages, which peaked near 9.25 percent in early January, have been as low as 8.25 percent in recent weeks. Sales have yet to register much improvement, with contract signings down 5 percent in February.
Mr. Berson said the recent fall in interest rates will help the market somewhat. He noted that rates have only recently fallen enough to make buyers take notice, and it might take another month or two -- to allow buyers to look at houses and make decisions -- for the effects to be reflected in sales figures.
"It takes awhile for people to change their behavior," he said.
But falling rates will only help so much. Mr. Berson expects the economy to grow by about 2 percent in the second half of the year, with Maryland's economy doing worse. Home sales across the country will fall by 5 percent to 7 percent in 1995, perhaps more in the Baltimore area, he said.
Gary Kaukonen, president of Coldwell Banker Home Realty Professionals in Severna Park, said the refinancing boom two years ago is also hurting business today.
When 30-year fixed rates fell to under 7 percent in the fall of 1993, thousands of homeowners refinanced. Those homeowners are hesitant to move and exchange their loans for new mortgages, even ones with interest rates just 1 or 2 percentage points higher, he said.
Mr. Kaukonen said that falling rates have drawn buyers back into the market, but "I wouldn't say it's had a great effect."
In addition, he said many people don't realize that rates have fallen, blaming the press for not reporting on the fall of rates as vigorously as their rise.
"The perception of most members of the public is that rates are pretty much up there," he said.