Home Sales Near 19-Year High Attractive Mortgage Rates, General Optimism Fuel Sales

New-home sales surged 5.1 percent in November, propelled by falling mortgage rates and the most buoyant consumer confidence in nearly three decades.

Economists said sales for all of 1997 probably hit a 19-year high and predicted the strength will carry over into early this year.

“We’re working on all cylinders. You have cyclically low mortgage rates. You have a robust economy,” said economist David Lereah of the Mortgage Bankers Association of America. “The bottom line is that has given the consumer the financial wherewithal to go out there and buy homes.”

New single-family homes sold at a seasonally adjusted annual rate of 830,000 in November, the most since April 1986, the Commerce Department said Wednesday.

Analysts predicted sales for all of 1997 topped 800,000, roughly a 6 percent increase over 1996 and the best since 817,000 new homes were sold in 1978. Sales should slacken to around 760,000 this year, still among the handful of best years during the past two decades.

“We think the economy as a whole, homebuilding included, will slow down a bit,” said economist Michael Carliner of the National Association of Home Builders. “But it still looks very positive. … The slowdown in 1998 will be a fairly modest one.”

Economists had expected home sales to slow late in 1997. Instead, they’ve taken off as interest rates have fallen, the result of skittish investors withdrawing from Asia and sinking money into the U.S. bond market.

In November, sales of new homes rose strongly everywhere but the West. They surged 23.4 percent to a rate of 79,000 in the East. They jumped 14.9 percent in the Midwest to a rate of 162,000, the most since December 1993, and 4.9 percent in the South to a rate of 382,000.

In the West, sales fell 6.3 percent to a rate of 207,000. They were hurt by bad weather.

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