A surge in new home sales got the third quarter off to a surprisingly strong start for mortgage lenders, delivering immediate rewards to those that have expanded in the Northeast.

The housing and mortgage markets continued to flex their muscles at the otherwise feeble economy last week. Fixed-rate mortgage rates hit their lowest point since October of 1998, and the Census Bureau reported Friday that new home sales jumped 4.9% from June to July, to an annual rate of 950,000.

The sales reflect a boom-like housing market, several experts said, and activity rose in all regions. Most economists had expected a decline.

The biggest increase was in the Northeast — 18%, to an annual rate of 72,000. Washington Mutual Inc., through its acquisitions of Fleet Mortgage Group, Dime Bancorp. Inc., and PNC Mortgage, has greatly increased its presence there. In addition, Countrywide Home Loans, J.P. Morgan Chase & Co., and even H&R Block Inc. — through its new mortgage company — are beefing up in the East.

With leading indicators, such as mortgage applications, looking strong, the housing and mortgage markets should maintain their momentum, said David Berson, chief economist at Fannie Mae.

“It would take a collapse in the housing market of monumental proportions to keep us from reaching record home sales,” he said.

A collapse appears unlikely with the 30-year fixed-rate mortgage average hitting 7.07% on Friday, its lowest point since falling to 6.68% in the wake of the Russian debt crisis in the fall of 1998, according to HSH Associates, a financial research firm in Butler, N.J.

The strength of the housing markets is in turn keeping the economy out of recession, experts say. And with mortgage rates plumbing historic lows, a six-month boom in refinancing, which had showed signs of waning, could reignite in the coming months.

“It’s extraordinary — the housing market continues to defy economic gravity,” said Mark Zandi, the chief economist at Economy.com of West Chester, Pa.

Keith Gumbinger, the president of HSH Associates, said the housing market is so strong that it will most likely help the gross domestic product from turning down in the third quarter.

“Consumers have been keeping the economy out of recession, and housing is probably the biggest portion of that,” he said.

More homes have been sold in the first seven months of 2001 than in that period of any other year, Fannie Mae’s Mr. Berson said.

The Midwest was the second-strongest region in new home sales, which rose 6.9% there. Next were the West, at 4.6%, and the South, at 2.3% — which led in the absolute number sold, at an annual rate of 441,000.

The regional increases are “indicative of a market that shows no fear,” quipped Mr. Zandi.

Experts gave several reasons for the market’s bucking the economic trend, including a year of falling interest rates and a flight of capital from the stock market to real estate as investors look for solid assets and better returns on their money.

But increased liquidity in the mortgage market has also greatly contributed, several sources said. The last few years have seen very aggressive lending, said Mr. Zandi, making available ample credit for anyone looking for a mortgage.

Many borrowers with good credit can buy a home with no money down, noted Mr. Gumbinger, and even borrow for closing costs. “There’s a lot of liquidity in mortgage markets, creative underwriting, and access to credit for anybody who wants it,” he said.

Despite consensus that the current housing market is in the midst of a boom, experts diverged on its fortunes in the coming months.

Jade Zelnik, the chief economist at Greenwich Capital Markets, said that 30-year mortgage rates near or below 7% should provide a fairly powerful incentive for homebuyers. The question, she said, is how weak the rest of the economy is and how many more layoffs occur.

Mr. Zandi, however, expressed a more solemn view of the housing market’s future.

“We’re experiencing job losses, rising unemployement, slowing income growth — at some point that has got to take a piece out of the housing market’s strength.”

Tommy Fernandez contributed to this article.

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