Baltimore area new-home sales shot up by 26 percent in the last three months of 1995 over the same quarter in 1994, fueled by dropping interest rates and a strong demand for townhouses, the Legg Mason Realty Group said yesterday.
The fourth quarter helped push new home sales for the year up 4.2 percent over 1994, according to the survey.
The homebuilding industry continued to recover from a dismal first quarter of 1995, when new homes sales plunged more than 17 percent from 1994's first three months.
But the strength of the region's new-homes market continues to lie primarily at the low end, according to Legg Mason.
About two-thirds of sales in the fourth quarter were in subdivisions with average base prices under $150,000, well below the average price of new detached homes in the region -- $214,023.
In 1995 -- for the first time in recent years -- more buyers of new homes purchased townhouses, nearly 44 percent, than detached homes, under 42 percent.
The rest bought condominiums.
Builders sold a third more townhouses in the fourth quarter than in the same period in 1994.
Sales of new detached homes actually declined slightly in 1995, around 1 percent, continuing a trend that began early in 1994.
Detached home sales began to recover last summer, and in the fourth quarter were up more than 22 percent over the same period in 1994. But the recovery couldn't offset the weak first-half performance.
"People are reluctant to make a commitment for a $200,000-plus type house," said John Martonick, president of the Home Builders Association of Maryland.
"People are watching for something out there beyond the horizon that they can't see. I don't think interest rates being low are going to affect it."
Bob Ward, a Harford County builder, said that potential buyers of higher-end homes are nervous.
"I still hear my sales people saying that people are concerned about their jobs and a lot of them are reluctant to make a commitment to move up," said Mr. Ward.
But a University of Baltimore economist said that a dramatic transformation of the area's job market accounts for some of the increased demand for more affordable homes.
Michael Conte said there has been a reduction in high-paying, high-skill jobs. Another factor has been the entry into the housing market by children of Baby Boomers, he said. "I think much too much has been made of consumer confidence," he said.
"The market is for homes between $100,000 and $200,000," said Mr. Conte, director of the Regional Economic Studies Program at the University of Baltimore.
Above that price range, builders are scrambling for fewer buyers. Almost 25 percent of the new subdivisions are priced above $250,000.
But only 11 percent of the region's sales in the last quarter were in the $250,000-and-above subdivisions, according to Legg Mason.
In Howard County, the highest-priced jurisdiction -- averaging more than $295,000 for detached -- new homes sales dropped by 12.2 percent in 1995.
By contrast, Carroll County saw new home sales jump by 19.3 percent in 1995, according to Legg Mason. New detached homes in Carroll County are nearly $100,000 cheaper than in Howard, according to the survey of area builders.
Since 1992, the average base price of a new detached home in the region has risen nearly 15 percent, according to Legg Mason. It rose more than $8,500 over the past year, around 4.2 percent.
Meanwhile, the price of a new townhouse has risen less than 1 percent since 1992. The average base price of a townhome in the Baltimore region was $119,900 four years ago; today it is $120,990, according to Legg Mason.