ripe market for consumers looking to buy their first house, and leading indicators are pointing toward more of the same ahead. "You'd have a hard time finding a better condition for first-time home buyers," said Mark Zandi, chief economist at Regional Financial Associates, West Chester, Pa. "The housing sales market is doing wonderfully, and should be headed for continued strong activity," Mr. Zandi added. Housing starts have hovered around a 1.4 million rate through 1995 and existing home sales are headed for well over four million units for the year. The proportion of sales to first-time buyers is very high - almost 50% in California, Mr. Zandi said. In recent weeks, applications for loans to buy homes have accounted for about two-thirds of all volume, according to figures compiled by J.P. Morgan Securities Inc., New York. Home prices in areas like California and the Northeast were flat or down in 1994 and early this year. While they turned upward in the third quarter, they remain historically low. Unfortunately, the same low prices are making it difficult for homeowners who want to buy larger homes, Mr. Zandi said. But, according to most economists, the future for housing purchases and mortgage applications remains bright. Consumer confidence levels, which serve as leading indicators for home sales and mortgage applications, remain high, according to the most recent survey from the Conference Board in New York. The board called October's consumer confidence index "reassuringly strong" at 97, compared to an index of 89 in October 1994. Culled from mail survey of 5,000 households conducted by NFO Research in Greenwich, Conn., the index measures American consumers' appraisal of current business conditions, employment, income, and opportunity. The expectations part of the index, which measures how consumers feel they will fare in six months, continues its gradual rise since a low in the early 1990s. Expectations are up to an index of 91.5 this month, compared with 88.8 in September and 87.9 a year ago. But some economists warn that the stability and optimism the index numbers are showing may be misleading. "The American consumer in 1995 is like a punch-drunk fighter, flinching at the shadow of a closed fist," said Ken Goldstein, economist for the Conference Board. Consumers have been battered by a combination of the shutdown of "smokestack America," recession, and the corporate downsizing movement, leaving them ready to believe bad news, he said. While consumer confidence is not low, he said, any negative economic news will have a strong impact. "This is something like getting over a divorce - it takes more than six months," Mr. Goldstein added.

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