
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, March 2, 1990                   TAG: 9003023537
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-8   EDITION: EVENING 
SOURCE: Associated Press
DATELINE: WASHINGTON                                 LENGTH: Medium

SALES OF NEW HOMES FALL 7.1%

Sales of new homes plummeted 7.1 percent in January to the lowest level in nearly a year, as both mortgage rates and prices continued to climb, the government said today.

The Commerce Department said new single-family homes were sold at a seasonally adjusted annual rate of 589,000 units in January after falling 8.4 percent in December. December sales originally were reported to have dropped 9.6 percent. It was the worst performance since sales fell to 556,000 homes on an annual basis last March.

It marked an ominous start for the new year after new-home sales slowed to 650,000 units in 1989, down 3.8 percent from 1988 and the lowest level since 639,000 homes were purchased in 1984.

The National Association of Realtors reported Wednesday that sales of existing homes, which represent about 80 percent of the housing market, dropped 2.2 percent in January. The real estate group blamed the drop on higher mortgage rates and the usual January buying lull.

Interest rates rose from 9.83 percent to 10.05 percent in January, according to surveys by the Federal Home Loan Mortgage Corp. Rates continued to rise in February, reaching 10.31 percent by last Friday.

Realtors chief economist John Tuccillo said Wednesday that he expected rates to taper off in the spring.

The Commerce Department said the median price of a new home continued to climb in January, rising 1.4 percent to $127,000. The median means half of the homes cost more, half less.

On the other hand, the average price of a new home in January fell 2.9 percent to $152,600.

The South suffered the largest sales drop, down 18.9 percent to 202,000 units at an annual rate. Sales in the West were off 5.9 percent to 190,000 units.

But sales in the Northeast, where housing activity had been slow, rose 13.5 percent to 109,000 units. Sales also rose in the Midwest, up 1.1 percent to 88,000 homes at an annual rate.

by CNB