THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Monday, May 22, 1995 TAG: 9505200210
SECTION: BUSINESS WEEKLY PAGE: 16 EDITION: FINAL
SOURCE: BY JANET DUNPHY, SPECIAL TO BUSINESS WEEKLY
LENGTH: Medium: 70 lines
Sluggish home sales and higher interest rates appear to be taking a toll on some Hampton Roads retailers who say homeowners have yet to catch the spring buying fever.
From floors to furniture, local businesses are feeling the pinch of less consumer spending. Some say sales never picked up after Christmas, when work on the house usually takes a hiatus, while others have noticed the slowdown just within the last six weeks.
Hampton Roads home sales fell 21 percent in March, the latest month for which figures were available.
``That's kind of what the Federal Reserve intended,'' said economist David Garraty of Virginia Wesleyan College. ``My speculation is that higher interest rates have finally caused the foot to come off the accelerator locally.''
``Historically, construction is sensitive to interest rates. That reverberates at the secondary level, the retail and supplier levels,'' Garraty said. ``February was surprisingly good. There was solid growth, even in construction.''
In fact, the jobless rate in Hampton Roads dropped to 4.6 percent in March, the lowest point since August 1990. But many retailers still felt pinched by the slump in house sales.
``Right now sales are very spotty,'' said Len Balistreri, manager of the Window Warehouse in Virginia Beach where the primary business is replacement windows for existing homes. ``It's not a great indication for summer.''
Balistreri said sales are down about 25 percent. ``It always slows down around the holidays but it usually picks up again,'' he said.
Normally the Window Warehouse, which employs six people full-time, can rely on walk-in business or its Yellow Pages advertising. But lately, said Balistreri, the business has had to do some outside marketing and lower prices as well.
``The last two to three months have been slower than usual,'' said Don Cherry, owner of Dixie D, a carpet and custom drapery business in Norfolk and Portsmouth. ``First-quarter sales were up over last year but April and May are down about 12 percent. But we're still ahead for the year.''
Cherry, who employs 26 people, also said customers don't like to spend money during the tax season. Most of Dixie D's customers are remodeling existing homes.
``There's been a moderate drop, but significant, about 15 percent, over the last six weeks,'' said Bob Davis at Oakdale Furniture Co. in Norfolk, which employs 13 people. ``The housing glut and interest rates will probably put a damper on it for the next several months.''
``We've noticed things have been down since about the middle of March,'' said Daphne Benton, owner of the Kitchen Center in Hampton. ``Now it seems to be picking up.''
Like many retailers, the Kitchen Center doesn't rely on one sector for business, selling major appliances for custom-built homes and existing ones.
``Ideally, we sell to a mix of old and new homes. Usually we find that if new homes aren't going in people are remodeling,'' said Benton. ``Now we're seeing a whole lot more speculation for new homes.''
Benton said she also has only six employees, adding, ``It makes us more efficient.''
Jeff Murden, manager of Murden's Appliance in Virginia Beach, said his business often shifts to repairs when residential sales are down. Also, with only seven employees, ``I think the low overhead has helped us a lot.''
``It started to slow down around December,'' said George Brown, owner of Brown's Carpet Center in Portsmouth. Brown said he keeps the business busy with commercial work when the residential jobs dry up.
KEYWORDS: HOME SALES RETAIL SALES JOBLESS RATE ECONOMY by CNB