2 Reports Show Upbeat Signs of a Recovery : Economy: Consumer confidence soared to a 20-month high, while sales of previously owned homes were up 5.8% from October.

Home sales soared in November and consumer confidence is now at a 20-month high, two reports said Tuesday, providing some of the strongest evidence yet that the economy is pulling out of its long slump.

Sales of previously owned homes last month were up 5.8% from October and were 19.2% ahead of sales in November, 1991, The National Assn. of Realtors said. The seasonally adjusted annual rate of 3.85 million units sold represented the second monthly gain in a row and the highest level of sales since December, 1986.

In a separate report, the Conference Board said that its monthly consumer confidence index was up almost 13 points to 78.3 for December from a revised 65.6 in November.

The steep rise in consumer confidence was larger than most analysts expected. The increase followed an 11-point gain in November and pushed the index to its highest level since April, 1991, when jubilant consumers started spending again after a quick victory in the Gulf War.

Fabian Linden, an economist for the New York-based business-research group, said the rise in the confidence index should translate into more consumer spending and a healthier economy.

“An increase of such a dimension in so brief a time period generally foreshadows significant improvement in the nation’s economic performance,” Linden said.

But some economists fretted that the recent run-ups in home sales, consumer confidence and other key indicators could be short-lived.

“There have been some unique factors at work in the economy over the past several months,” said William K. MacReynolds, an economist at the U.S. Chamber of Commerce.

“Consumers got some of their confidence back around election time, after the uncertainty about who was going to be our next President cleared up, and spending for things like furniture and appliances went up after the hurricanes in Florida and Hawaii ended,” MacReynolds said.

“But those were both one-time events that can’t be considered a good foundation for a full-blown recovery. The economy is getting better, but we’re not out of the woods yet.”

MacReynolds expects the economy to grow at a 3% annual rate in the first quarter of next year, about in line with the growth rate of the last six months. But he expects growth to slow to about 2% in the second quarter, in part because consumers will be filing their tax returns and will have less money to spend.

Some analysts said November’s gain in home sales was spurred in part by a belief that interest rates had hit bottom after several months of sharp declines.

“Mortgage rates started creeping up in the fall, and I think a lot of people decided to buy before rates could go any higher,” said Bud Smith, executive vice president of the realtors’ national trade group.

The 5.8% gain in November home sales was led by a 7.7% increase in the South.

Sales in the 13 states that make up the western region rose 3.8% in November from October to a seasonally adjusted annual rate of 820,000 units. Last week, the California Assn. of Realtors’ reported that sales in the state rose 1.9% in November, the third monthly sales gain in a row.

Prices remained virtually flat. The median price of the typical U.S. home stood at $102,900 in November.

Existing Home Sales:

Seasonally adjusted annual rate, millions of units

Nov. ‘92: 3.85 Oct. ‘92: 3.64 Nov. ‘91: 3.23 Source: National Assn. of Realtors