Though new construction of single family homes has leveled off after two years of large increases, the sale of existing family homes in 1999 shattered the all-time record, exceeding 9,000 units, and for the third consecutive year, gross dollar volume of single-family home sales topped $1 billion. The State-Wide Multiple Listing Service, Inc., a subsidiary of the Rhode Island Association of Realtors reported 9,659 existing single family homes were sold in 1999, more than 700 more than the previous high of 8,937 similar properties sold during 1998.
“Demand and supply reached a balance earlier in 1999 than expected so the last few months were less active,” said Ronald Phipps, president of the Rhode Island Association of Realtors and broker/president of Phipps Realty in Warwick. “We saw a surge in sales mid-year when mortgage rates were at or near their lowest and there was a lot of talk about them going up.”
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In contrast, the Rhode Island Builders Association reported Rhode Island’s cities and town issues 2,639 building permits this year, up just 3.82 percent from the 2,542 issued in 1998.
The figures contrast sharply with the 14 percent increase from 1997 to 1998, and the 7 percent increase from 1996 to 1997. It also contrasts with increases in the mid-1980s when annual growth reached as high as 32 percent.
Still RIBA’s President John Picerne isn’t discouraged. “This healthy 3.28 percent increase shows the demand for new homes continues to grow at a manageable and sustainable rate,” he said. “The increase means more and more Rhode Islanders are achieving their dream of owning their own home.”
Picerne attributed the slower growth to a busy construction market which make it hard for home builders to hire the trades people and subcontractors they needed as well as the slow and steady increase in mortgage interest rates.
In an attempt to slow the economy, the Federal Reserve raised interest rates by a quarter of a percentage point in February and again last week, which Phipps said might also effect the sale of single family homes in the upcoming months.
”Overall, housing affordability conditions are favorable for most people,” he said. “First-time buyers with good credit are in pretty good shape; however, in the higher cost markets, the recent rise in interest rates means they may have to lower their sites or consider adjustable-rate mortgages.”
Still, from now until May or June, Realtors are hoping to see the state’s housing inventory swell.
”Traditionally the spring market is characterized by an increase in new listings,” Phipps said, “so I would expect this situation to improve. If a seller really wants to get an edge on the spring market, now is the time to list their property.”
State-Wide MLS noted that existing single family homes sold last year were on the market an average of 20 days less before being sold – 116 days in 1998 compared to 96 days in 1999.
