The depressed California housing market, which has been dampening national expectations of a strong year, is showing signs of a revival. Sales this year should be the highest in five years, according to a report from TRW Redi Property Data.

The Riverside, Calif., supplier of real estate statistics expects the sales volume Of new and existing homes to reach 378,000 by year's end, 7.5% higher than in 1993. Sales have been down or fiat since 1989.

Nima Mattagh, a TRW Redi analyst, said the higher volume will help residential lenders to rack up some unexpected business in today's otherwise weak lending environment. TRW expects sales of new homes to jump by a strong 3.5% for the year, Mr. Mattagh said. He said some California areas are improving quite rapidly and that the hardest-hit region, Southern California, is among those showing signs of life.

Mr. Mattagh says home sales in the Anaheim-Santa Ana region should climb by 17.2% this year, and a 13% jump is expected in the Long Beach-Los Angeles area. Lagging will be Bakersfield and Redding, both in the Central Valley. They should have gains below 3%. Both had been strong in recent years.

Economists say an improved market in California is not only good for the local economies but for the whole nation. Expansion of its huge markets can certainly bode well for those with a strong presence on the West Coast, and that includes most major mortgage banking companies and many large thrifts. But other lenders are sensitive to California as well.

"I don't think any large lender can ignore California, Mr. Mattagh said.

On the downside, Mr. Mattagh does not believe that the gains in California will be enough to take up very much of the slack in loan originations nationally. While the housing outlook is better, he said, t.l?e broader economy still lacks signs of solid growth.

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