Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, December 31, 1993                   TAG: 9312310091
SECTION: BUSINESS                    PAGE: A-11   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

NEW-HOME SALES SURGED TO A SEVEN-YEAR HIGH

"It's surprising in that it happened to occur as a blip. . . . It's not surprising in that it's reflective of the general strengthening in the overall economy," said economist Robert R. Davis of the Savings & Community Bankers of America.

Sales of new single-family homes jumped 11.3 percent, to a seasonally adjusted annual rate of 807,000, the highest level since April 1986, the departments of Commerce and Housing and Urban Development said.

Treasury Secretary Lloyd Bentsen, in a year-end statement, said, "The economic future of this country is brighter than it's been in a long time. I'm confident the good news will continue in 1994."

He predicted the economic growth rate in the final three months of this year would register between 4 percent and 5 percent and continue at a moderate 3 percent next year.

The November gain in new-home sales followed a 2.2 percent drop in October and a 15.4 percent advance in September.

The West accounted for the bulk of the increase. Sales there skyrocketed 33.8 percent to a seasonally adjusted annual rate of 273,000, the highest level since March 1979.

Economist David Seiders of the National Association of Home Builders said he was at a loss to explain the surge in the West, which includes the soft market in Southern California.

"We know that some parts of the Western region are doing nicely . . . but I worry this is one of those cases where the Commerce Department's sampling methods are kind of thin," he said.

Sales rose 6.2 percent in the South, to a rate of 327,000 units, and 0.7 percent in the Midwest, to 154,000 units, the highest in 22 months. Sales fell 10.2 percent in the Northeast, to 53,000.

Economists say home sales are a key part of the fourth-quarter revival, sparking construction and purchases of home-related goods such as furniture and appliances.

Existing homes also are selling briskly. Buyers of both new and previously owned homes apparently feared mortgage rates would rise further after rebounding from a 25-year low of 6.74 percent in mid-October.

The Federal Home Loan Mortgage Corp. said 30-year, fixed-rate mortgages averaged 7.2 percent this week, up from 7.17 percent last week.

The median price of a new home in November was $130,000, up 0.9 percent from last year and matching the record set in April 1990.