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NEW HOME SALES DOWN 2.6 PERCENT IN JULY

 NEW HOME SALES DOWN 2.6 PERCENT IN JULY
 WASHINGTON, Aug. 31 /PRNewswire/ -- Long-term mortgage interest


rates hovering near 20-year lows were not enough incentive to lure buyers back into the lackluster housing market, as new home sales fell 2.6 percent in June to 563,000 on a seasonally adjusted annual basis, the Commerce Department reported today.
 "The job market is the real key to housing and the economy and the unemployment figures continue to hurt consumer confidence," said Robert "Jay" Buchert, president of the National Association of Home Builders (NAHB). "This is somewhat balanced by low interest rates, but the overall pattern is one of sluggishness."
 In early July, the Federal Reserve cut its key discount rate from 3.5 percent to 3 percent in a bid to boost the listless economy. Long-term mortgage rates soon fell to 8 percent, the lowest level since 1973, and adjustable mortgage rates hit all-time lows. However, as a result of fundamental weaknesses in the overall economy, an increase in economic activity failed to materialize.
 "Congress and the administration cannot rely strictly on monetary policy to boost economic activity, and they must set aside political differences and enact legislation that will stimulate the housing market, which has traditionally led the economy out of recession," Buchert said.
 "The best way to jump-start housing and the economy is to create jobs, and the perfect prescription to achieve these goals is for Congress to pass the home buyer tax credit," he added.
 When Congress reconvenes from its summer recess next week, the Senate is scheduled to wrap-up work on a major tax bill that includes, among other things, a $2,500 tax credit for first-time home buyers who purchase their home between July 28 and Dec. 31, 1992.
 "If the home buyer tax credit is enacted promptly, it could create as many as 240,000 new jobs and stimulate construction of an additional 125,000 homes in the second half of 1992 and early 1993," Buchert said.
 Regionally, new home sales fell 16.9 percent in the Northeast and were off 10.1 percent in the South. They rose 11 percent in the Midwest and 9 percent in the West.
 Regional numbers can have a big bounce from month-to-month and must be charted over a period of several months in order to get a clear picture, according to Buchert.
 "The decline in the Northeast can be attributed to an unusually high bounce in June," he said. "The market there is basically flat while the Midwest and South are fairly solid. The West is the most fluid region. Despite this monthly gain, our builders say this region has not yet turned around and there is continued weakness in this sector."
 -0- 8/31/92
 /CONTACT: Jay Shackford of the National Association of Home Builders, 202-822-0406/ CO: National Association of Home Builders ST: District of Columbia IN: SU: ECO


DC -- DC021 -- 5165 08/31/92 17:45 EDT
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Date:Aug 31, 1992
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