Home Sales Jump 3.9% During July : Economy: As opposed to the national picture, California is flat. Consumer confidence falls for the second month.

House hunters rushed to take advantage of plummeting mortgage rates in most of the nation last month, boosting sales of existing homes 3.9%.

But buyers stayed on the sidelines in recession-racked California, where home sales remained flat and prices dipped slightly.

Nationwide, resales of single-family homes totaled 3.48 million at a seasonally adjusted annual rate in July, when mortgage rates fell to their lowest level in 19 years, the National Assn. of Realtors reported.

In California, the rate of 396,060 resales was essentially unchanged from June’s revised seasonally adjusted annualized rate of 395,880 homes. The statewide median price of an existing single-family home sold during July was $198,520, down from $200,060 in June.

The uptick in home sales “seems to confirm that interest rates do make a difference,” said Daryl Delano, a housing economist with Cahners Economics in Newton, Mass. “We certainly can’t attribute the (increase) to gains in employment and consumer confidence.”

Indeed, consumer confidence fell in August for the second straight month, according to the Conference Board. The New York-based business research group reported Tuesday that its consumer confidence index dropped 3.2 points to 58.

That was down from 61.2 in July, when it had plunged 11.4 points. And unemployment remains obstinately high at 7.7%.

The July level of home sales, the highest since April, is 6.7% above the July, 1991, rate of 3.26 million, according to the realtors group. The annualized figure represents the number of homes that would be sold during the year if sales continued at the July pace. It is adjusted for seasonal factors that influence home sales.

The sales were spurred by low 30-year, fixed-rate mortgages, which declined to a nationwide average of 8.13% in July after the Federal Reserve lowered its benchmark discount rate. Last month’s mortgage rate was the lowest since 8.05% in July, 1973. In July, 1991, the average rate was 9.58%.

The realtors are forecasting that fixed-rate, 30-year mortgages will average 8.3% this year, down from 9.2% in 1991. As a consequence, some analysts expect home sales to continue to improve.

Even before the Fed acted, however, sales of new homes had begun to rise. They jumped 7.9% in June, the first increase since January. Delano predicted another increase when the Commerce Department reports on July sales next week.

Although housing starts fell in July for the second straight month, applications for building permits rose 3.7%, the first gain since February. Permits often are a barometer of future activity.

The realtors said many of the sales in July were to first-time buyers lured by the lower rates. That, in turn, caused the median price to fall 2.4% to $102,600 from $105,100 in June. The median means that half of the homes cost more and half less.

“Many people are finding that they could be making mortgage payments that are lower than their rental payments,” said Dorcas T. Helfant, president of the realtors group.

Regionally, sales in the Midwest surged 12.8% to a 970,000 annual rate, up from 860,000 in June. The median price fell 1% to $81,500.

Sales were up 0.8% in the South, to a 1.25 million rate, while the median price slipped 1% to $91,500.

Sales were unchanged in the Northeast and West. They totaled 540,000 at an annual rate in the Northeast and 720,000 in the West. The median price was down 2.8% to $140,800 in the Northeast and 2.1% to $142,600 in the West.

Meanwhile, consumer confidence in the economy eroded to the weakest level since March, the Conference Board said.

The results reflected growing uncertainty about the recovery from recession. Consumers were more negative than in July, both in their view of the current situation and expectations for the future.

“There now appears to be scant likelihood of any significant quickening in the pace of economic growth in the immediate months ahead,” the business research group said.

Economists said the weak job market and the economic rhetoric generated by the presidential election campaign were making consumers more wary of spending.

Consumer Confidence

From a monthly survey of 5,000 U.S. households

Aug., 1991: 76.1

Aug., 1992: 58.0

Source: The Conference Board

Existing Home Sales

Seasonally adjusted annual rate, millions of units

July, ‘92: 3.48

June, ‘92: 3.35

July, ‘91: 3.26

Source: National Assn. of Realtors