Home sales sound despite interest rate increases

0 Comments | La Crosse Tribune, Jul 03, 2000 | by Cahalan, Steve

Building permits numbers down

The number of building permits issued for new single-family homes from January through May was down from the same period last year in La Crosse , Onalaska, West Salem and unincorporated areas of La Crosse County, but was up in Holmen, according to figures supplied by local government officials.

From January through May, the city of La Crosse issued six building permits for single-family homes compared to 11 for the same period last year; Onalaska issued 25 compared to 28 a year ago. West Salem issued 10 building permits for single-family homes from January through June, compared to 24 for the same period last year. West Salem is running out of lots to build homes on, Village Administrator Ken Knutson said.

From January through May, La Crosse County issued 62 zoning permits for singlefamily homes compared to 76 for the same period a year ago. And the village of Holmen issued 53 building permits for single-family homes, up from 45 a year ago.

Effect 'hasn't been huge'

The effect of higher mortgage rates "hasn't been huge," said Brad Price, executive vice president of First Federal Savings Bank.

The number of existing and new home sales that First Federal financed throughout its territory from January through May was down about 10 percent from the same period last year due to higher mortgage rates, Price said, adding that the percentage for the La Crosse area would not be substantially different than First Federal's systemwide figure. "Every uptick in interest rates will take some borrowers out of the market," he said.

But the total dollar amount of First Federal mortgages issued from January through May is about the same as a year ago for new homes, and is down "very slightly" for existing home sales, Price said.

"Our home loans have been larger this year," Price said. Through May, they have averaged $105,720 (throughout First Federal's territory), up from $93,633 for the same period a year ago. "The biggest reason is people are buying and building larger homes," Price said.

Adjustable-rate mortgages (ARMs) have become increasingly popular because of higher mortgage rates in the past year, Price said.

From January through May, fixed-rate mortgages accounted for 25 percent of the total dollar volume of First Federal home loans, and ARMs accounted for 75 percent. For the same period last year, fixed-rate mortgages accounted for 70 percent and ARMs accounted for 30 percent of First Federal's home loan dollar volume.

"The biggest impact the (higher) rates have had is it's caused a reduction in refinancings," Price said.

Although consumers may have become accustomed to lower mortgage rates in the last few years, Price said, "They are still very affordable."