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LOW MORTGAGE RATES CONTINUE TO DRAW HOME BUYERS IN NOVEMBER

 LOW MORTGAGE RATES CONTINUE TO DRAW HOME BUYERS IN NOVEMBER
 WASHINGTON, Dec. 30 /PRNewswire/ -- Favorable financing sparked more entry-level home sales in November, indicating that low interest rates, rather than economic uncertainty, are motivating first-time buyers, according to the National Association of Realtors. Activity was heaviest in the lower-cost areas of the nation.
 The association recorded a seasonally adjusted annual sales rate (A) of 3.33 million existing single-family homes nationwide in November, 5.4 percent above the October rate of 3.16 million units. The monthly increase was the largest since last February, when the rate of 3.16 million units rose 9.7 percent from January. The November resale rate was 5.7 percent above the November 1990 rate of 3.15 million units.
 Housing is the only sector of the real estate industry that is "clearly getting a boost" from low mortgage interest rates, said NAR President Dorcas T. Helfant. "We are seeing a steady flow of buyers, mainly in the entry-level category," she said, noting that purchases of lower-priced homes are helping to keep many housing markets stable. "Those sales are keeping housing out of the doldrums," Helfant said.
 The Federal Home Loan Mortgage Corp. (Freddie Mac) reported that the national average commitment rate for 30-year, conventional, fixed-rate mortgages was 8.71 percent in November, compared to 8.84 percent for the previous month. The November average mortgage rate was the lowest monthly rate recorded by Freddie Mac since March 1977, when the rate was 8.69 percent.
 While mortgage rates below 9.0 percent have spurred activity among first-time buyers, low rates "have failed to work much magic" among more affluent trade-up buyers, Helfant said. Because repeat buyers are motivated by different factors than people buying starter homes, they are less apt to buy during shaky economic times, she noted. "Repeat buyers are much more reluctant to make a move now. They have a home of their own, equity in the home, and the tax benefits of homeownership. They already have what first-time buyers are looking for in homeownership. So, unless they're forced to move, they're sitting tight until the economic picture improves," Helfant explained.
 Additionally, people who have recently refinanced their existing mortgages to obtain a lower interest rate likely will not be selling their homes and trading up very soon, she added.
 A slight decline in the national median existing-home price between October and November shows that the majority of homes sold in November were in the lower price ranges. The national median price was $97,800, down 1.4 percent from $99,200 in October. The median is the midpoint in the price range -- half the homes sell for more, half for less. However, the price rose 6.3 percent from November 1990, when it was $92,000.
 The increase in housing demand resulting from lower-price home sales likely will keep annual home appreciation strong on a national basis, said NAR Chief Economist John A. Tuccillo.
 The South and the Midwest, the regions with the largest stock of lower-cost housing, both posted monthly increases in the pace of existing-home sales. Activity was notably strong in the South, where November's resale rate of 1.38 million units rose 11.3 percent from October's rate of 1.24 million units. The rate was 7.8 percent higher than that for November 1990. The median existing-home price in the South was $87,300 in November, down 1.0 percent from $88,200 in October, but up 4.6 percent from November 1990.
 In the Midwest, the rate of existing-home sales rose 4.5 percent, from 880,000 units in October to 920,000 units in November. The rate was 7.0 percent above that from one year ago. The median price in the Midwest was $77,700 in November, up 0.8 percent from $77,100 in October, and up 8.2 percent from November 1990.
 The West recorded an existing-home sales rate of 530,000 units in November, down 1.9 percent from 540,000 units in October, but up 6.0 percent from a year ago. The median price in the West was $139,500, down 5.1 percent from $147,000 in October, and down 0.1 percent from November 1990.
 The Northeast posted a resale rate of 500,000 units in November, which was unchanged from October and from November 1990. The region's median price was $138,000, up 1.2 percent from $136,300 in October, and up 2.8 percent from one year earlier.
 Tuccillo noted that mortgage rates will stay on a downward trend, due to recent action by the Federal Reserve Board to cut the discount rate it charges for loans to banks. He predicted that the interest rate for fixed-rate, 30-year mortgages could drop to as low as 8.0 percent during the early part of 1992. "As rates keep going down, we expect to see more vitality in the market," he said.
 NAR expects resales to total 3.26 million units this year. A total of 3.49 million existing-home sales is predicted for 1992, which would represent an increase of 7.0 percent from 1991.
 There were 2.55 million existing single-family homes available for sale nationwide in November, which was a 9.2-month supply based on last month's resale rate.
 The National Association of Realtors, "The Voice for Real Estate," is the nation's largest trade association, representing nearly 800,000 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 resale 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- 12/30/91
 /CONTACT: Trisha Morris, 202-383-7560, Lois Clinton, 202-383-1016, or Walter Molony, 202-383-1177, all of the National Association of Realtors/ CO: National Association of Realtors ST: District of Columbia IN: SU: ECO


SB -- DC002 -- 2784 12/30/91 09:02 EST
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Date:Dec 30, 1991
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