Two of the nation's key housing leaders are in disagreement over the direction of new home sales, with Housing and Urban Development Secretary Andrew Cuomo predicting another record year, but National Association of Home Builders President Robert Mitchell worried that interest rate increases are beginning to drag down sales.

Pointing to new first quarter statistics released last week and during the weekend, Cuomo said he felt the nation's economy was on a record pace.

"The outstanding performance of our nation's economy continues to strengthen the housing sector," Cuomo said. "This gives more families the opportunity to become homeowners, improves business, and creates jobs in the home building, real estate and lending industries."

Mitchell says, however, the numbers were collected before the latest round of mortgage rate increases.

"An increasing number of builders are reporting that interest rate increases are resulting in reduced buyer traffic and that their expectations of future sales have weakened," Mitchell said.

Mitchell made the statements in connection with release of the NAHB's latest Housing Market Index (HMI), which rose to 63 in May, suggesting that builders expectations for future sales are beginning to fall.

"While the score of 63 reflects a relatively strong market, it's important to note that this survey was taken before the recent upturn in mortgage interest rates over the last week to 8.52 percent from 8.28 percent," Mitchell said.

Cuomo, however, looking at the Housing Market Conditions 1st Quarter Report, noted that in March new home sales were at the second-highest monthly level ever recorded.

"If this level continues throughout the year, 2000 will be the best year ever for new home sales," Cuomo said.

According to HUD, the nation's homeownership rate rose to a record high in the first quarter of 67.1 percent. A total of 70.7 million American families owned their homes in the first quarter of the year - more than at any time in American history.

When Clinton took office, he pledged a homeownership rate of 67.5 by the end of his administration. In all, 8.9 million more families owned homes in the first quarter of 2000 than when he took office in 1993.

The HUD report on conditions in January, February and March 2000 found:

Published: May 23, 2000

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