Preliminary estimates now available show 1998 to have been a very good year for the housing industry and for the housing consumer. Numerous records were set and many indicators are the best they have been in more than a decade.

• New home sales totaled 888,000 in 1998, outstripping the previous record set in 1977 by 8 percent.

• Existing home sales totaled 4,785,000 according to the NATIONAL ASSOCIATION OF REALTORS^®, overturning the old record set in 1997 by nearly 14 percent.

• Homeownership was enjoyed by 66.3 percent of American households in 1998, a new record surpassing 1997's 65.7-percent rate.

• The NATIONAL ASSOCIATION OF REALTORS^®' Housing Affordability Index averaged 135.7 percent, and this is a 26-year high.

• Interest rates averaged 7.12, the lowest since 1970.

• The National Association of Home Builders' index of builders' confidence averaged 70 points during 1998, and this is a new record.

• Housing permits totaled 1,603,000, the highest in 12 years.

• Housing starts totaled 1,615,600, the highest in 11 years.

• Shipments of manufactured housing units are likely to be the highest on record once the December figure is determined.

While many worry that the activities of 1998 cannot be repeated, the strong finish in the fourth quarter is setting a vigorous pace for the beginning of 1999. Housing production finished the year on high notes across the board. The final quarter of 1998 saw gains in permits and starts, and third-quarter shipments of manufactured homes were also up.

• In the fourth quarter, 1,690,000 permits were issued on a seasonally adjusted annual rate (SAAR), up 7 percent from the third quarter and up 14 percent from the fourth quarter of 1997. Single- family permits at 1,242,000 (SAAR) were up 6 percent from last quarter and 13 percent from the fourth quarter a year ago.

• Housing starts totaled 1,692,000 (SAAR) units in the last quarter of 1998; this is 4 percent higher than in the third quarter and 11 percent above the final quarter of 1997. Single-family starts at 1,338,000 (SAAR) were up 5 percent from last quarter and up 17 percent from the fourth quarter a year ago.

• Shipments of new manufactured homes totaled 372,000 (SAAR) in the third quarter of 1998, up 1 percent from the second quarter and up 5 percent from the third quarter a year ago.

Housing sales and marketing also broke records throughout the fourth quarter, with nearly 6 million new and existing homes sold on a seasonally adjusted annual basis in December.

• New home sales totaled 967,000 (SAAR) houses in the fourth quarter, up 13 percent from the third quarter and up 17 percent from 1997's fourth quarter. The November seasonally adjusted annual sales rate, 1,015,000 homes, was the highest monthly estimate since the series began in 1964. December was the 16th consecutive month with sales over 800,000 (SAAR).

• Existing home sales reached 4,893,000 units (SAAR) during the fourth quarter of 1998, up 2 percent from the third quarter and up 12 percent from the fourth quarter a year ago. In December existing home sales set a new monthly record of 5,030,000 (SAAR) units.

• Inventories are at all-time low levels. The new homes inventory at the end of the fourth quarter represents 3.7 months of sales. A new monthly low of 3.6 months' supply of new homes was set in November. The inventory of existing homes was at an all-time low in December and represents 3.8 months of sales.

• Prices are fairly stable. The median price of new homes sold was $150,400 in the fourth quarter, down 2 percent from the previous quarter but up 4 percent from a year ago. Even when adjusted for quality change, the price of new homes increased only 1 percent from the third quarter and 4 percent from last year. Existing homes had a median price of $131,000 in the fourth quarter, down 1 percent from the third quarter but up 5 percent from a year ago.

• Placements of new manufactured homes were at a seasonally adjusted annual rate of 332,000 units in the third quarter, up 4 percent from the second quarter and up 14 percent from the third quarter of 1997.

• Builders ended the year optimistically. The National Association of Home Builders' housing market index broke records and averaged 76 points during the fourth quarter, up 5 points from the third quarter and up 18 points from a year ago.

These results are the consequence of a very robust economy featuring very low unemployment rates, stable prices, income growth, and low interest rates. While the housing industry has enjoyed one of its best years, the American family is experiencing the most favorable situation with respect to housing affordability and homeownership in a generation. Low interest rates, moderate home prices, and growing incomes have contributed to high levels of home-ownership and housing affordability. Interest rates averaged 6.77 percent on 30-year, fixed-rate mortgages, down 10 basis points from the third quarter and down 42 basis points from the fourth quarter of 1997. A family earning the median income and purchasing the median-priced home would have more than enough income to afford the purchase -- in fact the family would have 137.8 percent of the income needed. This is 5.7 percentage points higher than in the third quarter and 6.8 percentage points more than in the fourth quarter of 1997. These factors have led to the second highest quarterly home-ownership rate ever -- 66.4 percent in the fourth quarter, down 0.4 percentage point from the record-setting level of the third quarter but up 0.7 percentage point from the fourth quarter of 1997.

Multifamily (5+ units) housing also experienced a solid fourth quarter, with production levels generally strong and with favorable absorption and vacancy rates.

• In the fourth quarter, 378,000 (SAAR) permits were issued for multifamily units, up 12 percent from the third quarter and up 22 percent from the fourth quarter of 1997.

• Multifamily housing starts totaled 316,000 (SAAR) in the fourth quarter, down 1 percent from the third quarter and down 4 percent from the fourth quarter of 1997.

• In the fourth quarter, 71 percent of new rental units completed in the previous quarter were leased, up 1 percent from the third quarter but down 3 percent from the fourth quarter of 1997.

• The rental vacancy rate was 7.8 percent in the fourth quarter, down 0.4 percentage point from the third quarter but up 0.1 percentage point from the fourth quarter of 1997.

Regional Perspective

HUD's field economists report that all regions finished the year with healthy employment gains. New England job markets are tight and unemployment has fallen to near-record lows. The Washington, D.C. metropolitan area accounted for 35 percent of total employment gains in the Mid-Atlantic region. The strongest economic growth was in the Southwest and Pacific regions. Employment growth in the Northwest slowed from prior years, as lumber, agriculture, aerospace, and high-technology sectors bore the impact of the situation in Asia.

1998 was an outstanding year for homebuilding throughout the Nation. Single-family home building permits were up in every region, with 9 of the 10 regions achieving their largest totals of the decade. Among the highlights, the Southeast continued to boom and single-family activity in the Atlanta metropolitan area was almost 20 percent ahead of last year for the third consecutive record-breaking year. The Southwest's four markets -- Austin-San Marcos, Dallas-Fort Worth, Houston-Galveston, and San Antonio -- all reported large increases in single-family permits. Single-family building permits in California were up 11 percent, and 1998 activity in Arizona and Nevada set records.

Rental housing markets throughout the Nation also showed big gains in apartment production and continued strong demand in 1998. Multifamily housing building permit activity increased in every region. The New York City metropolitan area continued to show strong performance, with a 22-percent increase in the number of units permitted. The Washington, D.C. area recorded a 31-percent increase. The Dallas-Fort Worth and Houston areas recorded big increases in apartment construction and continued rapid absorption of new units. Denver-area multifamily permits were up 22 percent, a record for the 1990s. The Pacific region had the best year since 1990. The Seattle metropolitan area's rental housing market remains extremely tight despite increased apartment construction.