New-home sales soared an unexpected 6.7 percent nationally in April, the U.S. Commerce Department said yesterday.
But slow job growth is a likely culprit restraining the pace of sales in Maryland, economists said.
The new-homes market posted strong gains for the fourth consecutive month, selling at a seasonally adjusted annual rate of 776,000, the Commerce Department said.
It marked the first time the rate remained above 700,000 for four straight months since September-December 1993.
Sales rose as well in the South -- the region that includes Maryland -- but only at a 3 percent rate over March, figures showed. Economists estimated an even slower pace in Maryland, although the Commerce Department releases no sales figures for each state.
Given recent increases in mortgage rates, "in terms of sales, it's kind of surprising how strong the increase actually was from March to April," said Stanley F. Duobinis, director of forecasting for the Washington-based National Association of Home Builders, noting that the biggest jump came in the Northeast, the most depressed of the regions.
"It looks like housing consumers have not been turned off by the rise in interest rates and are moving to adjustable-rate mortgages to make their new-home purchases," said Randy Smith, president of the national association and a builder in Walnut Creek, Calif.
Based on building-permit numbers, Maryland likely had a slower pace of growth than the South as a whole, where April sales rose 3 percent, to a seasonally-adjusted annual rate of 340,000.
Building permits issued during the first three months of the year for single-family homes fell 5 percent statewide and in the Baltimore region, Duobinis said. The permits -- which indicate the number of homes builders anticipate selling, as well as those already sold -- show builders responding to a flat market, he said.
"That's no surprise, because the Maryland economy is extremely weak, and job growth is very, very low," Duobinis said.
Maryland has remained in the bottom five in the nation in job growth for much of the past two years, he said.
It ranked 10th from the bottom in March.
The weakness -- a result of cutbacks in federal and defense-related jobs, and the loss of numerous business headquarters -- has filtered down to new-home sales, leaving many builders anticipating a year that, at best, will mirror 1995's sales levels.
In the Baltimore region, some builders described sales overall as sluggish.
"My attitude is, Maryland is not a pro-business, pro-growth state," said Gregory S. Dorsey, president of Dorsey Development Inc. in Carroll County.
But builders said that certain geographic areas -- Crofton in Anne Arundel County and some areas of Harford County -- and certain demographic segments of the market have remained strong for new-home sales.
Robert W. McGee, president of Keystone Homes Inc. of Bel Air, said his company has found a niche in marketing to Baby Boomers as they age. Keystone, which used to build mostly townhouses targeted at first-time buyers, has branched into vacation homes near Ocean City, and condominiums and townhouses in Harford and Cecil counties that are designed with older, more affluent buyers in mind.
One mortgage analyst, Keith Gumbinger of HSH Associates of Butler, N.J., described the increase in the South as a "very solid gain" even though the region's April sales lagged behind the nation's as a whole.
"It really shows that the rise in interest rates over the last couple of months hasn't seriously damaged housing," Gumbinger said.
"We didn't think it would, considering mortgage interest rates are still relatively low."
The rise in popularity of alternatives to traditional 30-year,
fixed-rate loans has helped, he said, as consumers have found they can qualify for adjustable loans with lower rates.
For instance, in the Baltimore region yesterday, rates on 30-year loans averaged 8.17 percent, while rates on 15-year loans
averaged 7.67 percent and one-year adjustables had an average rate of 5.66 percent, he said.
Pub Date: 5/31/96