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EXISTING-HOME SALES GO UP AS INTEREST RATES GO DOWN

 EXISTING-HOME SALES GO UP AS INTEREST RATES GO DOWN
 WASHINGTON, Sept. 25 /PRNewswire/ -- The lowest mortgage interest


rates in nearly 20 years opened up homeownership to more buyers during August, according to the National Association of Realtors.
 The association recorded a seasonally adjusted annual sales rate(A) of 3.34 million existing single-family homes in August, up 4.7 percent from August 1991, when the resale rate was 3.19 million units.
 According to NAR President Dorcas T. Helfant, first-time buyers are continuing to dominate activity in many markets. "Entry-level buyers are out in force, and they are buying as much as they can afford," she said. Rather than risk rate increases in the future, many buyers -- both entry-level and trade-up -- are taking advantage of the current low levels of mortgage rates, Helfant noted. "It's hard to guess when rates will hit bottom, and buyers aren't taking any chances," she said.
 Last month's national median existing single-family home price was $104,400, which was 2.4 percent higher than one year earlier, when the price was $102,000. The median is the midpoint in the price range -- half the homes sold cost more, half cost less. Steady demand caused the year-to-year price increase, Helfant noted.
 The Federal Home Loan Mortgage Corp. reported that the national average commitment rate for 30-year, conventional, fixed-rate mortgages was 7.98 percent in August, the lowest monthly average since June 1973, when the rate was 7.73 percent. In August 1991, the average rate was 9.20 percent.
 Mortgage rates this year have generally remained at least one percentage point below the rates offered last year. In many cases, this percentage point difference in mortgage rates "means the difference between buying and not buying," Helfant said. For instance, the monthly principal and interest payment on a home priced at $104,400 (the median price for August) would be about $613 using a loan with an 8 percent rate, compared to about $672 with a 9 percent loan. These payments are based on a 30-year, fixed-rate loan covering 80 percent of the price.
 NAR Chief Economist John A. Tuccillo pointed out that although favorable affordability conditions are keeping activity steady, the housing market actually is underperforming, due to persistent sluggishness in the economy. "The numbers look good, but they could be better," he said. "Low rates are driving sales up, but consumer uneasiness over the economy is keeping activity below its potential."
 Still, year-to-date sales continue to exceed those for last year. The association recorded a total of 2.34 million existing-home sales between January and August, which was 4.9 percent higher than the total of 2.23 million units for the first eight months of last year.
 All of the regions posted year-to-year increases in existing single-family home sales. In the Northeast, the pace for August was 520,000 units, up 6.1 percent from August 1991. "We're getting more and more signals that the Northeast is coming out of the tunnel," Tuccillo said. The median price for existing single-family homes in the Northeast was $142,000 last month, down 0.2 percent from one year earlier. The slip in the Northeast median price was due to a large volume of sales at the lower end of the price scale, Tuccillo noted.
 The resale rate in the Midwest was 880,000 units in August, which was up 6.0 percent from one year ago. The median existing-home price in the Midwest was $81,900, up 3.3 percent from August 1991.
 The South posted a resale rate of 1.23 million units in August, up 4.2 percent from the August 1991 pace. The region's median price was $95,000 last month, up 4.7 percent from one year earlier.
 Despite economic sluggishness in California, the West recorded a year-to-year increase in the rate for existing home sales. In that region, the sales rate was 720,000 units in August, 2.9 percent above that for August 1991. The median price in the West was $137,400 last month, down 5.4 percent from a year ago. The drop in the price suggests that "bottom fishing" is occurring in California's slower markets, Tuccillo noted. "In those areas, buyers clearly are in an excellent bargaining position," he said.
 Currently, NAR is predicting existing single-family home sales to total 3.48 million units this year, rising 8.2 percent from 1991, and reaching the highest level since 1988.
 The National Association of Realtors, "The Voice for Real Estate," is the nation's largest trade association, representing nearly 750,000 members involved in all aspects of the real estate industry.
 (A) The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume normally is higher in the summer and relatively light in the winter months, primarily because of differences in the weather.
 -0- 9/25/92
 /CONTACT: Trisha Morris, 202-383-7560; Liz Duncan, 202-383-1043; or Scott Sherwood, 202-383-1016; all of the National Association of Realtors/ CO: National Association of Realtors ST: District of Columbia IN: SU: ECO


DS -- DC002 -- 3416 09/25/92 09:13 EDT
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Date:Sep 25, 1992
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