The United States housing industry is feeling the pinch of higher interest rates, industry excutives and government statistics both suggest. The slowdown in home sales and the resulting decline in construction activity are two signs that the recent rise in interest rates is starting to retard economic growth in the US, many economists say.
The US Commerce Department reported Tuesday that housing starts dropped 10.5 percent from their April level to a seasonally adjusted annual rate of 1.78 million in May. Some cooling also has been evident in auto and retail sales and in industrial production.
''All of the big-ticket consumer items are hit fast and hard by rising rates. The larger the price of the item, the more consumers are hit by any increase. So housing is always the first to go,'' says Thomas Harter, senior vice-president of the Mortgage Bankers Association of America.
The rise in interest rates clearly has been felt at housing subdivisions around the US.
''In the spring we were selling at the rate of about 60 to 70 houses a week. That has dropped off to 40 to 45,'' says Bruce E. Karatz, president of Kaufman and Broad Development Group, a Los Angeles-based builder whose sales are concentrated on the West Coast.
''Our traffic (at sales offices) peaked in March and has been sliding ever since,'' reports Charles E. Peck, chairman of The Ryland Group, a Columbia, Md., builder with operations in 11 states. Unless sales rebound strongly this summer, the firm's business will not equal the 5,000 homes it built in 1983, he says.
''There is a slowing in the marketplace although not of dramatic proportions, '' Kaufman and Broad executive Karatz says. ''If rates continue upward, we are going to see a continual shrinking of the market.''
Many experts say they expect interest rates in general, and mortgage rates in particular, to keep climbing as 1984 continues. These forecasters say they expect private borrowing to collide even more strongly with government borrowing to cover the federal deficit, thus pushing up rates.
Although rates may ''bounce around a bit'' along the way, by next year commitments from lenders on 30-year, fixed-rate loans will climb to between 15 and 15.5 percent from the 14 percent area now, says Richard Peach, director of financial market analysis for the National Association of Realtors.
Such a rise in rates would dampen sales of new and existing homes, many forecasters say. As a result, the pace of housing starts is expected to slow by year's end to about the 1.5 million to 1.6 million rate, says Frank Cooper, an economist with Wharton Econometric Forecasting Associates.
Forecasters do not expect housing to return to the depessed sales pace experienced in 1981 and 1982, when homes were being built at about a 1.1 million-unit annual rate.
A decline in housing starts to the million and a half level would follow the strong 1.935 million average pace the industry enjoyed in the first five months of 1984.
''It looks like a pretty strong first half and a weak second half,'' says Michael Sumichrast, chief economist for the National Association of Home Builders (NAHB).
Sales so far have been propped up by consumers buying in anticipation of higher interest rates, more widespread use of adjustable-rate mortgages (which lower first-year interest expenses), and relatively strong personal income. The government reported personal income in May rose 0.6 percent.
The expected slowdown in housing activity has broad implications for the rest of the economy, because it translates into lower demand for lumber and other building materials, carpets, appliances, and furniture.
There are significant regional differences in the pace of home sales, builders say. For example, sales are strong in the Baltimore-Washington area, Mr. Peck says, and weak around Cincinnati. Texas, Florida, and California have played a particularly large role in the housing recovery, NAHB officials say.
If they materialize, higher mortgage rates will exert downward pressure on the prices of new and existing homes. After adjustment for inflation, the price of existing homes is ''not going anywhere'' in 1984 says Mr. Peach.
The median price of an existing single-family home at the end of 1984 will be adjustment for inflation as home prices rise less than the inflation rate.
The median price of a new home will rise about 8 percent to $82,000 this year , Peach estimates, due to housing shortages in fast-growing areas of the country and rising costs for building materials.
To make these higher prices and steeper mortgage rates easier to swallow, ''We have started to see buy-downs coming back,'' says Mr. Harter of the Mortgage Bankers Association. In a buy down, a builder pays a fee to a lender to lower the rate on home buyer's mortgage.
And owners of existing homes probably will have to start offering financing far below market rates to help purchasers, Peach says. Such concessionary financing lowers the profit a seller realizes from selling his home.