Activity on Buying Is on Increase

The nation’s residential real estate markets are showing signs of recovery as interest rates fall, prices stay within reach and consumer confidence begins to revive after the Persian Gulf War, industry observers say.

After a slump lasting three years in some areas, buying activity at many levels has increased and prices for houses and apartments in most regions have at least hit bottom or are beginning to climb.

Coastal California is showing signs of movement after a stagnant 12 months, while the Pacific Northwest market is resuming its robust growth after a brief hiatus earlier this year.

Many areas of the Midwest that have avoided the dramatic peaks and troughs of other markets now are experiencing rising prices.

In the Northeast, hit hardest by the market decline, prices have at least stabilized, while metropolitan areas in Texas are staging a strong comeback after the oil price collapse of the mid-1980s.

The recovery is being driven mainly by lower interest rates, soft prices, and easily available financing, analysts say.

“What we are looking at is a subcycle of residential real estate,” said John Tuccillo, chief economist at the National Assn. of Realtors in Washington.

March’s new homes sales were roughly equal to those of September, 1990, he said, indicating the market slumped during the Persian Gulf crisis and has climbed back to where it was last fall.

An increase in sales activity can be expected since mortgage rates are at their lowest point since the early 1980s and buyers are getting more encouragement from prices that are still low in many markets.

Better Homes and Gardens Real Estate Service, a national network of realtors, in a survey conducted in the third week of April found that 88% of brokers cited stepped-up activity since the end of the war.

The survey of the service’s top 50 realtors revealed 55% said first-time buyer activity had increased from a year earlier, while 39% said it was stable.