Hobbled by high prices and rising interest rates, the spring home-buying season is off to a slow start, according to figures issued by the National Association of Realtors.
The figures show the median price of a resale home reaching a record-high $93,100 in February while the volume of sales declined 3.1 percent from the previous month.The annualized resale rate was 3.44 million homes in February. That's the lowest since March 1988, when the resale rate fell to 3.38 million homes on a seasonally adjusted basis.
"Interest rates are pushed up and buyers are pushed out," said NAR President Ira Gribin of Encino, Calif. "The first people we lose are lower-income buyers who can barely qualify for a home loan."
Southern California is still the hottest real estate market in the country, but the market has gone frigid in New York and New England and cooled off in the South and Midwest.
Sales fell 18.3 percent in the Northeast during February as interest rates on 30-year mortgages climbed to 11 percent.
The NAR's chief economist, John Tuccillo, sees better times ahead. "As interest rates ease up," he said, "we expect sales to increase. Early indications are that March sales will be at a good level."
Others were less optimistic.
"It doesn't look good at all," said Michael Sumichrast, housing consultant and former chief economist at the National Association of Home Builders. "The spring season is pretty much over. High prices and high interest rates have killed it."
Sumichrast said he sees no sign, with inflation at 6 percent so far this year, that the Federal Reserve Board is ready to stop raising interest rates.
"I don't like it. I'm against it," he said, "but I think interest rates are going up, not down."
The unanswered question is how long and how far rates will rise.
"We expect rates to keep rising this spring and peak at about 11.5 percent as the economy slows down," said Thomas Holloway, an economist for the Mortgage Bankers Association.
Tuccillo conceded that buyers have been priced out of the market in parts of the Northeast, where the typical home sells for well over $140,000 and supply is beginning to exceed demand.
The market is much healthier on the West Coast.
The median price of a resale home reached $133,700, a new record, in the West last month, but the strong demand for homes, especially in California, has kept the market from going flat.