Slump in West Hurts New Home Sales Nationwide : Economy: The western region posted a whopping 19.5% drop in August. The 6.1% decline for the U.S. was the largest since March.

Led by a steep decline in the West, new homes sales dropped 6.1% nationwide in August despite the lowest home mortgage rates in 19 years, the Commerce Department said Wednesday.

Sales increased in the Northeast and Midwest, the report said, but plummeted a whopping 19.5% in the West, which has been hit hard by the economic slowdown.

For the nation as a whole, the August decline was the largest on a month-to-month basis since an 11.5% drop in March. Even so, the seasonally adjusted annual rate of 570,000 sales in August was 9.2% higher than the 522,000 sales recorded in August, 1991, when the market was mired deep in recession.

Analysts and builders said 1992’s low mortgage rates still aren’t enough to get consumers spending again. Rates averaged 7.98% in August, and inched up to 8.02% last Friday.

“There’s no question home sales aren’t what they were several years ago,” said Richard Lewis, president of Upland-based Lewis Homes. He said his company’s sales in Southern California are down by about 2% from last year, which itself “was not a great year.”

But he said overall sales for his company, which also builds homes in Sacramento, Nevada and Arizona, were up by about 5%. “Nevada in general is stronger than Southern California,” he said. “I think the defense cuts have hurt Southern California. Nevada is more dependent on tourism.”

According to the Commerce Department, sales also declined in the South--by 5.2%. But the Northeast and Midwest reported gains of 7.5% and 4.3% respectively.

Analysts said the housing market is being hurt by low consumer confidence, which has not improved because the economic recovery has been very slow.

“The housing industry is suffering from a Catch-22,” said Stephen Dobi, vice president and senior housing analyst with Smith Barney, Harris Upham & Co. in New York. “People will not buy houses until they are more secure about the direction of the economy, and the economy is not about to improve until people buy houses.”

Dobi said many people still fear for their jobs. “And in an environment of fear and unemployment, it’s not like people will go out and make what for many of them will be the single biggest investment of their lives,” he said.

New Home Sales

Seasonally adjusted annual rate, thousands of units

Aug., ‘92: 570

July, ‘92: 607

Aug., ‘91: 522

Source: Commerce Department