Wednesday, December 22, 2004

Home Sales Perk Back Up

By KENNETH R. GOSSELIN, Courant Staff Writer

After four straight months of declines, sales of existing single-family homes in Greater Hartford rebounded in November, a month that is typically one of the slowest of the year.

But despite nearly 6 percent more sales, economists say the long-term forecast for the area's 57-town housing market is for a moderate slowdown as demand gets tapped out and mortgage rates rise.

"One month does not necessarily break a trend," said Ronald F. Van Winkle, a West Hartford economist. "November ameliorates the decline, but it doesn't change the forecast."

Bob Fiorito, manager of the Beazley Co. real estate office in West Hartford, said more talk recently of mortgage rates rising may have spurred some buyers to move.

"People want to get in before that happens," Fiorito said.

The average for 30-year, fixed-rate mortgages has remained below 6 percent far longer than expected. But borrowing costs will rise as the economy improves, economists say.

No one is predicting a collapse of the area's housing market. But economists and some real estate agents clearly see a slowdown coming that will rein in double-digit price increases propelled by three straight years of record-breaking sales.

Closed sales in November rose 5.9 percent, to 900, from 850 in the same month a year earlier, according to data from the Greater Hartford Association of Realtors.

The stronger sales come on the heels of a deep 20.3 percent drop, the fourth in a string of monthly declines.

Even with slower sales, price increases have continued. That, economists say, suggests that buyers who can still afford to pay higher prices are doing so while mortgage rates remain low.

In November, prices continued their advance. The average sales price rose 11.1 percent, to $271,139, up from $244,033 for the same month in 2003. The median sales price also increased, to $230,750, up 10.3 percent from $209,200 in November 2003.

Although prices have risen at a double-digit pace in recent years, a recent report lent more support to the forecast that the area's housing market is not in danger of crashing.

The report found that prices in most Hartford-area towns, adjusted for inflation, still have not reached the level that they hit before the real estate crash of the late 1980s.

The association also reported an 11.1 percent increase in new listings for November, to 1,111, from 1,000 a year earlier. And deposits also rose, by 8.7 percent, to 886, from 815 in November of last year.

Fiorito said November's sales rebound shows the area's housing market remains healthy and is on track to have another record-breaking year in 2004.

For the first 11 months of this year, closed sales are up 4.2 percent, compared with the same period last year, according to the association of realtors.

Jeff Arakelian, the association's president and chief executive, said 2005 should be a good year, although sales are not likely to match the levels of this year.

Van Winkle and other economists say they are still concerned about slow job growth in Connecticut, particularly in Greater Hartford.

The pace of job growth in the area has the potential to affect the housing market, especially when the outlook for growth is weak.

When job growth is tepid, fewer people move into Connecticut to take jobs and buy houses.

And a growing number of would-be house hunters already living here may grow less confident about buying a starter or a larger house if they are not sure they could find another job if they lose theirs.

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