KENTUCKY REPORT

WILLIAM THOMPSON executlve vlce prealdent

by Oon l. Campbell

I xrenesr rates rose amid fears that Ithe Fed is tightening credit conditions further, and higher rates have surely pushed stocks much lower.

Sales on new single family homes dropped in Juneto 2.9t/o for the first time in 4 months. Those in the know say that the sharp rise in mortgage rates indicates that sales will continue to decline. An official of the Home Builders Association figures that sales have fallen 3090 from May levels. They say it is because mortgage rates have climbed back to the l4t/o level. If the rate persists, builder groups see new home annual sales falling to 450,000 from the 638,000 adjusted annual rate of last year. The inventory of unsold houses rose 9,000 in June to equal a 5-7 month's supply.

There is no doubt in my mind that the whole home building industry will be set right back on its heels if this interest rate continues to climb. Too many builders figure that this slowdown is going to get worse and that sales will continue downward for the rest of the year.

Now no one expects housing to return to the dismal levels of the past couple of years. Last year we had 1.06 million units. So far this year we have topped the