Housing industry in California one of the 'brightest spots' in the state's recovery
Los Angeles — California's home-building industry is making a brisk comeback. Calling it ''one of the brightest spots in the state's strong economic recovery,'' Robert T. Parry, chief economist and executive vice-president of Security Pacific National Bank in Los Angeles, says residential building activity in the Golden State should jump 71 percent this year, to 143,500 units authorized from only 84,000 last year.
Next year's total should edge up to 146,600 units, he adds. This, however, is still far below the 270,000 units in 1977.
Dr. Parry sees the current trend, which started a year ago, as being sustainable for at least the next 18 months, spurred by financing innovations, consumer demand, and growth in real disposable income.
He includes in his list of financing innovations new forms of variable- or adjustable-rate mortgages, tax-exempt mortgage-backed bonds, and builders' assistance in financing through temporary interest-rate subsidies or buy-downs.
Nationally, new home sales rose 13.7 percent in September, following two months of decline. This took place despite a jump of $7,500 in the average price of a new home - now pegged at a record $98,700.
The increase in new home sales around the country comes as mortgage rates continue to climb.
But mortgage rates may soon be heading the other way.
Conventional mortgage rates should decline to a national average of about 12. 5 percent by the end of the year, from 13.5 now, according to Michael Sumichrast , chief economist for the National Association of Home Builders.
He says he expects that interest on fixed-rate loans will dip even more, perhaps dropping to 12 percent by early next year.