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

DATE: THURSDAY, March 30, 1995                   TAG: 9503310012
SECTION: BUSINESS                    PAGE: B-7   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

NEW-HOME SALES PLUMMET IN FEB.

Sales of new homes fell in February to the lowest level in nearly three years, but analysts said the latest sign of economic slowdown exaggerated weakness in the housing industry.

``The new-home sales numbers are correct and they are incorrect,'' economist John A. Tuccillo of the National Association of Realtors told a housing outlook forum Wednesday. ``They are correct in direction ... but don't believe the magnitude.''

The Commerce Department report released shortly before the forum showed sales declined throughout the country, including the steepest plunge in the West in more than 13 years.

Overall, sales plummeted 14 percent to a seasonally adjusted annual rate of 551,000, the lowest since 546,000 in April 1992. The drop was the largest since a 22 percent decline in January 1994.

David Lereah, an economist with the Mortgage Bankers Association, told the outlook forum that ``housing definitely has weakened,'' but suggested a ``modest pickup during the spring home-buying season.''

Economist David F. Seiders of the National Association of Home Builders predicted the 551,000 sales rate would be revised up to about 600,000 next month.

The new-home sales report is based on relatively small sample surveys and often is revised.

The decline in new-home sales followed reports of slack existing-home sales and a drop in construction of new houses. In fact, the report suggested even fewer housing starts as builders try to reduce their inventories.

It estimated that a seasonally adjusted 350,000 new houses were for sale at the end of February, the biggest backlog since 353,000 in June 1990.

The inventory was a supply of 7.7 months at the current sales rate, up from 4.9 months a year earlier and the biggest backlog since 7.9 months in February 1991.

Sales during the first two months of 1995 were 12.5 percent below the level of the same period a year ago.

Thirty-year, fixed-rate mortgages averaged 8.77 percent in February, down from 9.15 percent in January and the lowest since 8.68 percent in September, according to the Federal Home Loan Mortgage Corp.

Still, the February rate was well above the 7.15 percent average a year earlier and kept housing out of reach for many prospective buyers

The median price of a new home was $129,900, up from $127,900 in January but unchanged from February 1994.

by CNB