Lower mortgage rates and improved consumer confidence boosted demand for new townhouses in the Baltimore area during April, May and June, giving the region its first quarterly increase in total new-home sales in a year and a half, Legg nTC Mason Realty Group Inc. said yesterday.
In a quarterly survey, Legg Mason said sales in Baltimore and Baltimore, Harford, Carroll, Howard and Anne Arundel counties totaled 2,566, 5.7 percent more than the 2,427 sold in the second quarter last year.
It also was the first time in four years that townhouse sales, which gained nearly 19 percent, outpaced those of detached single-family homes, which fell slightly.
Two thirds of all sales were in subdivisions with average prices below $150,000 and fewer than 11 percent came from developments with average prices above $250,000.
The upswing is due largely to buyers' increased confidence and declining interest rates that have allowed a larger pool of buyers to qualify for a first home, said Harvey N. Singer, senior vice president of the realty group, which tracks new-home subdivisions of 20 homes or more.
Rates on 30-year, fixed mortgages have declined after peaking in December at over 9 percent. Thirty-year, fixed rates averaged 8 percent in the Baltimore region yesterday, according to HSH Associates of Butler, N.J.
"People seem to be more upbeat about employment prospects and their families' and their own economic situation," Mr. Singer said.
In an even more telling sign that the housing market could be gaining momentum, sales exceeded the 2,455 homes sold in the first three months of the year -- typically a much busier time for the new-homes market, Mr. Singer said.
Though the results came as good news to builders, they remained skeptical that the tide had turned in an industry where sales were off nearly 14 percent in 1994.
"We're still very nervous about the economy in Maryland," said Rick Kunkle, president of Patriot Homes Inc., which built 225 homes in the Baltimore and Washington metropolitan regions last year. "We still see a very tough market out there and a lot of competition."
Indeed, intense competition for buyers has prompted builders to attempt to outdo one another in offering special incentives such as finished family rooms, cathedral ceilings and appliances. Patriot has been able to boost sales of single-family homes by pricing homes from $180,000 to $200,000, a range that's affordable to a large share of buyers, Mr. Kunkle said.
Affordability also has been key to many of Ryan Homes' sales in White Marsh and Harford County, said Chuck Reich, the Baltimore North sales manager. Developments on his area are split between single-family homes and townhouses, but townhouses have accounted for two-thirds of sales each month, with many customers opting to make their townhomes more like single-family homes, he said.
"They're putting in more options, instead of just buying a box, you can get a sun room on the back, bigger master baths, and more people are finishing the lower level," he said.
Dwight Griffith, president of the Home Builders Association of Maryland, admits he hasn't heard too much upbeat sales talk among builders.
But, he said, "there comes a point when people who have been holding off finally come forward," and some of the homeowners who bought in the 1980s may have built enough equity to move up. "It's a hopeful sign, and I don't see anything that should change for the rest of the year."
Besides spurring increased buying, Legg Mason said, lower interest rates have encouraged some builders to boost home prices to their highest levels in recent years.
The median price of new-home communities rose 3 percent to $175,000 -- with $212,000 the median price of detached, single-family communities, $121,000 the median for townhouse communities and $95,000 the median for condominium communities, the survey said.