• The annual homeownership rate, at 65.7 percent, broke the all-time record set 17 years ago.

• Sales of existing homes totaled 4,215,000, setting a new all-time record.

• Sales of new homes totaled 800,000, making 1997 the third-best year on record.

• Housing permits and starts finished the year with levels that were the third highest in the past 10 years.

On a quarterly basis, housing production levels continued to be high in 1997:

• Permits in the fourth quarter increased by 4 percent to a seasonally adjusted annual rate (SAAR) of 1,474,000 homes, allowing 1997 levels to be slightly higher than those of 1996.

• Fourth-quarter starts increased by 5 percent to 1,475,900 housing units (SAAR), bringing 1997 to 900 units below the 1996 level.

• Shipments of manufactured homes in the third quarter were 356,000 homes (SAAR), slightly behind the second-quarter level.

Housing marketing also continued at high levels in the recent quarter:

• Existing home sales were 4,353,000 (SAAR) in the fourth quarter -- 2 percent above the third quarter.

• New home sales in the fourth quarter, at 806,000 (SAAR), were equal to the level of the third quarter.

• Placements of new manufactured homes totaled 279,000 (SAAR) in the third quarter.

Conditions at the end of 1997 point to a good start in 1998:

• Due to the high levels in the fourth quarter of 1997, builders and realtors finished the year with low inventories of unsold homes. At current sales rates, builders had 4.6 months of inventory and realtors had 4.3 months of inventory of existing homes.

• Builders' views of housing market activity continued to be positive, with the overall index value for the fourth quarter of 1997 unchanged from the third quarter.

Low interest rates led to favorable homeownership affordability gains in the fourth quarter of 1997 and to the highest annual homeownership rates ever recorded (despite a decrease in the fourth quarter). Interest rates in the fourth quarter of 1997 were down 28 basis points from the third quarter and down 50 basis points from the fourth quarter of 1996. Affordability improved in the fourth quarter of 1997 to the point that a family earning the median income had 131.7 percent of the income needed to purchase a median-priced existing home; this was 5.2 percentage points ahead of the third quarter's value. A favorable affordability situation, income growth, and solid economic conditions led to an annual homeownership rate of 65.7 percent, upsetting the old record of 65.6 percent set in 1980.

The multifamily (5+ units) market was healthy in the fourth quarter of 1997, making it the best year in the decade for multifamily housing:

• Permits were issued for 323,000 new multifamily housing units (SAAR) in the fourth quarter, up 5 percent from the third quarter. The annual total for 1997 reached 316,200 units, making 1997 the best year since 1989.

• Starts in the fourth quarter reached 348,000 units (SAAR), which was 27 percent ahead of both the previous quarter and the fourth quarter of 1996. Like the permit total, the 1997 annual total is the highest since 1989.

• During the fourth quarter, 73 percent of the 51,100 apartments completed in the third quarter were rented. This was down from the 77 percent of the second quarter's 44,200 completions that were absorbed in the third quarter.

• The rental vacancy rate declined to 7.7 percent in the fourth quarter, down 0.2 percentage point from the third quarter.

Regional Perspective

HUD's field economists reported that all parts of the Nation neared the end of 1997 with healthy economies and housing markets. Moderate to strong employment increases were experienced in all regions and most had declining unemployment rates. The largest employment gains occurred in the Pacific and Northwest regions, both of which had growth rates near 3 percent. The Southeast and Southwest were next, with growth rates near 2.5 percent. Unemployment rates have reached historic lows in many of the large areas of the Midwest. The States in the Great Plains and Rocky Mountain regions are reporting extremely low rates, some below 3 percent.

Homebuilding activity as measured by single-family building permits was down in 7 of the 10 regions in 1997. The declines, however, were just modestly off very strong 1996 totals for most of these regions. The New England, New York/New Jersey, and Pacific regions recorded gains in single-family permits last year. California's near-14-percent increase, spurred by its economic recovery, led the way in the Pacific. Data indicate that 1997 was another good year for home sales. All regions but the Rocky Mountain area report that sales of existing homes in 1997 through the fourth quarter exceeded last year's strong experience. Existing home sales in the New England and the Northwest regions were up a robust 12 percent.

Rental markets remained firm to strong at year-end as the continued high levels of apartment construction are being successfully absorbed in most areas. Building permits for multifamily housing in 1997 increased by 16 percent in New England, stimulated by the recovery of rental markets in Connecticut. Market conditions remain balanced throughout the Mid-Atlantic, despite a 22-percent increase in multifamily housing construction. Florida led the Southeast with an increase of 28 percent, with multi-family permits in Orlando more than doubling from the previous year. The Southwest continued to record strong increases in multifamily housing construction. The region was up 21 percent for the year, led by Texas, particularly in the Dallas/Fort Worth and Houston areas, both of which are sustaining high occupancy levels in apartments. Multifamily permits in California increased by 43 percent in 1997. Tight market conditions in the San Francisco Bay Area have stimulated apartment construction there. Multifamily permits dropped by 13 percent in the Las Vegas market as the apartment vacancy rate moved up.