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NEW HOME SALES RISE IN NOVEMBER; 1993 WILL BE BEST YEAR SINCE 1988, NAHB SAYS

 WASHINGTON, Dec. 30 /PRNewswire/ -- Sales of new homes made another strong showing in November, rising more than 11 percent to a seasonally adjusted annual rate of 807,000, and sales are now projected to reach 675,000 for the year, making 1993 the best year for sales since 1988, the National Association of Home Builders (NAHB) said today.
 "This number is indicative of the growing strength in the housing industry, but probably overstates that strength a bit," said NAHB President J. Roger Glunt. "We expect that the U.S. Commerce Department, which released the new home sales figures today, will revise this number downward next month to a more realistic level."
 The November sales level is the highest since April of 1986 when 857,000 new homes were sold. The original October figure of 679,000 was revised up today to 725,000, erasing most of the decrease in sales for that month.
 "Much of the activity in the market can be attributed to low mortgage interest rates and people moving out of rental accommodations and into their first homes," Glunt said. "Interest rates had fallen through October to below 7 percent, their lowest level in 25 years, and then began to move up slightly in November, causing people who were undecided about buying to resolve to buy."
 "The low rates have also made affordability conditions so attractive that renters who have been waiting for the right time to buy recognize that the time is here and are moving into their first homes," Glunt said.
 Regionally, new home sales dropped 10.2 percent in the Northeast, an area of the country that has been weak for some time. Sales increased less than 1 percent in the Midwest, 6.2 percent in the South and 33.8 percent in the West.
 "The huge increase in the West is out of character for that area of the country, which has been stuck in a recession for several years. We expect some of that increase to be erased by future revisions," Glunt said.
 The country's median new home price increased 4.1 percent to $130,000 in November, partly reflecting the large increase in sales in the West where prices are relatively high.
 The momentum that has propelled the single-family housing market in the second half of the year should carry over into 1994, Glunt said. New home sales in 1994 are expected to reach 700,000, which would be the best year since 1986. But this housing growth could be threatened by the continuing increase in the price of lumber and other building materials such as gypsum and insulation. The price of 1,000 board feet of framing lumber, as measured by the industry publication Random Lengths, rose again this week, to a record $510.
 "Already, the cost of building a home has increased about $4,000 since last spring due to rising lumber prices," Glunt said. "If lumber prices continue to skyrocket and the Clinton administration still refuses to address the timber supply crisis, the momentum that the housing industry is currently enjoying could grind to a halt."
 -0- 12/30/93
 /CONTACT: Lynn Rykowski of the National Association of Home Builders, 202-822-0366/


CO: National Association of Home Builders ST: District of Columbia IN: FIN PAP SU: ECO

KW-DC -- DC008 -- 8076 12/30/93 13:40 EST
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Publication:PR Newswire
Date:Dec 30, 1993
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