New-home sales up in Las Vegas, U.S.

Monday, Sept. 30, 1996 | 11:59 a.m.

WASHINGTON -- Sales of new homes unexpectedly shot up 4.7 percent in August to the highest level in more than 10 years as high mortgage rates failed to curb demand.

Regionally, sales soared in the Midwest to the highest level in nearly three years, the Commerce Department said today. Sales also rose in the South but fell in both the Northeast and West.

In the West, starts were down 2.7 percent to 219,000.

In Southern Nevada, sales rose 1.8 percent to 1,622, up from the July figure of 1,594. This year's figure was down 148 or 8.4 percent from August 1995 when 1,770 new homes were sold.

Nationally, sales of single-family homes totaled 832,000 at a seasonally adjusted annual rate, highest since 857,000 in April 1986. Analysts had expected a 4 percent decline.

The department also revised upward the July increase, to an 8.3 percent rate from 7.9 percent. It was the first time they have remained above the 700,000 pace for eight straight months since a similar string from November 1985 through June 1986.

During the first eight months of the year, sales were 15 percent above those of the same period of 1995. They totaled just 667,000 in all of 1995.

Most analysts have predicted for months that new home sales would level off as high mortgage rates drove buyers out of the market. Sales of existing homes fell in August for a third straight month but remained near their historic high.

Thirty-year, fixed-rate mortgages averaged 8 percent in August, the third consecutive month they were at that level or higher. Rates, which averaged just 7.03 percent last January, had risen to 8.16 percent last week.

The monthly payment on a $100,000 mortgage with a 7 percent interest rate is $665, while the payment on the same loan with an 8 percent rate is $734 -- a difference of $69.

But few analysts expect a plunge in housing activity. They say increased jobs and incomes often are offsetting the effects of high rates. Indeed, the Commerce Department reported today that personal income rose 0.6 percent in August, fastest in three months.

Analysts also note that rates remain well below the double-digit figures of most of the 1980s.

But they fell 13.9 percent in the Northeast, to a 62,000 rate, and 2.7 percent in the West, to 219,000.