Web Posted: 07/28/2005 12:00 AM CDT

San Antonio Express-News

The sizzling housing market is showing signs of staying power, with sales of new homes hitting an all-time high nationally in June and San Antonio housing starts mirroring the trend.

The Commerce Department reported that single-family home sales jumped to a record annual pace of 1.37 million units in June, up 4 percent from May. That follows a similar record for sales of existing homes, which was announced Monday.

In San Antonio, housing starts from July 2004 to June 2005 also were at a record pace of 14,651 — 23 percent above the pace for the previous 12 months, said Jack Inselmann, vice president of Metrostudy’s U.S. Central division. The city recorded 4,072 single-family starts during this year’s second quarter, a 26 percent jump over the second quarter of 2004.

Other reports released Wednesday showed that the economic strength isn’t just in housing and indicated that the momentum will continue into the second half of this year.

Orders for big-ticket manufactured goods posted a surprisingly strong 1.4 percent increase last month, and the Federal Reserve’s latest snapshot of business activity showed the economy was steaming ahead in June and early July.

The Fed’s latest economic survey showed a number of districts describing the current economic expansion as “solid,” bolstered by further gains in manufacturing, strong auto and housing sales and rebounding tourism, all coming in spite of rising energy prices. In the Dallas region, which includes San Antonio, strong construction and energy-related activity fueled growth.

Fed policymakers meet Aug. 9, and it is widely expected the central bank will boost interest rates for a 10th time since June 2004 as the central bank continues its efforts to make sure an expanding economy does not trigger inflation pressures.

Housing has been a major factor in the expansion.

Bob Buthod, a vice president at KB Home San Antonio, said his company has watched growth increase here steadily for more than a decade.

“Our backlog of sold homes is higher year-over-year,” Buthod said, adding that the homes under contract now will keep KB Home’s subcontractors busy for the next six months.

McGraw-Hill Construction reported June residential contracts for future construction in Texas totaled $2.67 billion, a 3 percent increase over June 2004. Through the first six months of 2005, residential construction contracts across the state were almost $15.3 billion, a 9 percent increase from the same period last year.

J.R. Howard, president of the Greater San Antonio Builders Association, said there has been a shortage of finished lots and plats for lot development. The shortage has driven up costs, as have increases in prices for building materials.

“Lot costs are passed on to the consumer,” Howard said, but “all builders in town are busy right now.”

Interest rates remain low enough that first-time home buyers continue to play a major factor in the economy, Howard said.

“Across the board, most of the market appears to be moving along at a constant pace,” Howard said. “But interest rates affect the entry-level buyer more than the upper levels.”

Mortgage rates, which had been falling for much of this year, have risen for the past three weeks — although they still stand at a historically low level of 5.73 percent for 30-year mortgages, according to a survey by Freddie Mac.

Despite the market’s strength, the median national price fell 5.5 percent to $214,800, but that was a reflection of stronger sales in the South, where prices tend to be lower. Local prices have been pushing up.

Michael Carliner, senior economist at the National Association of Home Builders, said the decline in new home prices also could be an indication that demand is strengthening in the lower end of the market.

Carliner predicted that sales of both new and existing homes will taper off slightly in the second half of this year.

Shares of homebuilders rose Wednesday. KB Home gained 23 cents to close at $81.27, Lennar Corp. rose 52 cents to end at $66.12, D.R. Horton Inc. rose 58 cents to $40.98, and Pulte Homes Inc. advanced 94 cents to $92.65 on the New York Stock Exchange.

The overall economy grew at an annual rate of 3.8 percent in the first three months of this year and analysts believe growth in the April-to-June period will be almost as strong, coming in at about 3.5 percent despite a surge in oil prices this year.

A 1.4 percent increase in orders for durable goods in June followed a 6.4 percent surge in May.

On Wall Street, the Dow Jones industrial average rose 57.32, or 0.54 percent, to 10,637.09.

The Standard & Poor’s 500 index rose 5.63, or 0.46 percent, to 1,236.79, reaching another four-year high, and the Nasdaq composite index rose 10.23, or 0.47 percent, to 2,186.22.