Realtors Say Home Sales Will Slow Next Year

Rising interest rates and the declining number of people who can afford to buy a home will cause home sales to slow next year, according to the California Assn. of Realtors.

Because sales will slow, so will big jumps in the price of houses, the Realtors group said.

Across the state, the Realtors said sales of used single-family houses will drop 7% from this year’s 552,500 houses to 513,800 next year.

But 1988 was an exceptionally strong year for home sales, up nearly 8% from 1987, itself a good year too.

This year the annual median price of a single-family home in California will probably reach $164,000, up more than 17% from 1987’s $139,800.

But next year home prices will probably increase only a little more than 8% statewide, the Realtors group said. That would mean a median price of $177,500.

Orange County prices have far outstripped the statewide average to make the county the nation’s most expensive market for single-family homes. Prices hit a median of $226,200 in the third quarter for a 32% gain over the last year.

While the trade association did not specifically mention Orange County in its forecast Thursday, the group has said it expects the Orange County market to slow next year and home prices to rise only in the low double-digit range.

The Realtors group said it expects interest rates to hit 11.5% by midyear, so “the prospect of any significant improvement in . . . affordability during 1989 continues to be extremely remote.”

Because so many people can’t afford houses, the trade group expects the condominium market to be strong next year. Sales already jumped 30% this year from 1987.

Next year sales will drop a slight 4% but that still means a strong market, the group says.

Condominium prices will rise next year by 6%, only a little less than this year’s increase of 8.5%. The average condo cost $112,280 last year, $121,870 this year and is estimated to cost $129,180 next year.