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Building boom hasn't quieted

The latest home building spree isn't dead just yet.

But the boomlet's vital signs are getting weak.

Economists at the National Association of Home Builders predicted last week that home construction nationwide will reach an eight-year high this year before rising interest rates slow things down.

The builders association predicts that when this year is over, 1.4-million new homes will have been built, up almost 11 percent from a year ago. That would be the highest number of new homes built in a single year since 1986.

(Surprisingly, it's not single-family homes buoying the housing industry this year. The association predicts that single-family starts will be up a meager 5 percent. But multifamily starts will be up a dramatic 50 percent as developers take advantage of new tax codes and the availability of financing.)

David Seiders, chief economist at the builders association, predicts that home starts nationwide will start to tail off during the fourth quarter of this yearand decline substantially in 1995 and 1996.

"The interest rate development is the key thing," he said in a telephone interview last week.

Seiders, like others, is almost certain the Federal Reserve will raise interest rates again in mid-November _ he thinks by half a point. He also thinks rates will rise again in early 1995.

As a result, Seiders is predicting that total home starts will slip about 4 percent next year and drop by 5.4 percent in 1996.

"The piece that we think will be weakening is the single-family side," he said. "Multifamily is still staging kind of a belated rally. That's unusual."

And what's the outlook for Florida, which leads the country in home building?

"The Florida outlook continues to be quite good as far as its share of national activity," Seiders said. "I think (construction) will probably move down (in Florida), too, but it will probably move down less than in other parts of the country."