New-Home Sales Hit 1-Year High : Real Estate: Sales remained flat in the West, but a nationwide surge in August fuels hopes that a recovery has begun.

New-home sales, bolstered by a dramatic drop in mortgage rates, jumped a surprising 6.7% in August to their highest level in a year. But sales in the West remained flat as fear of job layoffs kept recession-weary buyers on the sidelines.

“The West entered the recession later than the rest of the country and as a result the downturn has persisted a bit longer there than in other parts of the country,” said Daryl Delano, a senior economist at Cahners Economics in Newton, Mass.

Nevertheless the new figures from the Commerce Department bolstered hopes that the housing industry may be back on track after sales sputtered in July and touched off fears that a new housing slump might push the nation into “double-dip” recession.

“I think we have an up trend on our hands” said David F. Seiders, senior economist for the National Assn. of Home Builders, a trade group in Washington.

“The upswing in single-family housing provided positive economic support in the first quarter, and it’s going to be a positive piece of the economy in the third quarter too.

“But we don’t know yet whether the August numbers meant the (July) fallback was temporary, or whether it’s going to be the floor.”

Sales of new single-family homes rose in August to a seasonally adjusted annual rate of 540,000, up from a revised 506,000 rate in July, the Commerce Department reported. The 6.7% increase came after sales declined in July for the first time since January. The August rise pushed home sales to their highest rate since their 541,000 sales pace in July, 1990.

The biggest gain in new-home sales came in the Midwest, where they soared 24.7% to an annual rate of 101,000 units. Sales climbed 5.7% in the South, to a 221,000 rate, and in the Northeast by 3% to an annual rate of 69,000 homes.

In the West, sales remained unchanged at a rate of 149,000 units.

Although the western market is dominated by recession-wracked California, the once red-hot housing markets in Nevada and the Pacific Northwest also cooled in August. Experts blamed the slump on flagging consumer confidence and the impact of the recession in those states.

Although the government’s estimates of home sales may be later revised sharply, as they were in July and June, experts believe that the Federal Reserve Board’s efforts to lower interest rates to stimulate the economy are beginning to have a positive impact.

The average yearly interest rate on 30-year fixed-rate mortgages fell to 8.92% last week, according to the Federal Home Loan Mortgage Corp. That was the lowest level in 14 years and has prompted many beleaguered home builders to become more optimistic about the housing outlook.

“We think mortgage rates are a strong positive,” said L. C. (Bob) Albertson Jr., president of Presley Cos. of Southern California. “We are able to make some sales now that we weren’t able to in the past.”

Despite the lowering of interest rates, Albertson and other home builders caution that the state’s housing market remains tenuous and erratic.

In announcing its third-quarter results last week, Los Angeles-based Kaufman & Broad Home Corp. noted that its new-home orders rose substantially in September after declining sharply in July and August. But overall, the company said it sold 463 homes in California in the third quarter ended Aug. 31, down 29% from 653 new homes in the third quarter of 1990.

Most analysts foresee the state’s housing market improving modestly by the first quarter of 1992. The Construction Industry Research Board in Burbank forecasts that residential building will increase to 158,000 new units in California next year from a projected 119,000 units in 1991.

New-Home Sales Seasonally adjusted annual rate, thousands of units Aug., ‘91: 540 July, ‘91: 506 Aug., ‘90: 525 Source: Commerce Department