"Rolling Readjustment"

In San Diego, Builder William S Chamness, finding only one buyer for his tract of $31,000 homes, rented all but three of the remaining 67-- for barely enough to cover his mortgage in terest and taxes. In Detroit, eager home buyers last week snapped up new houses faster than contractors could complete them, and builders were sold out three months ahead of production. In Phoe nix, where a four-year building spree has produced a 20% vacancy rate in apartments, economists are predicting that it will take two years to absorb the oversupply. Yet in Cleveland, realty men talk happily of a sellers' market and are planning more subdivisions than at any time since 1960.

Such sharp. variations from city to city have become the national pattern in housing. The $26 billion industry which has been in an overall slump since mid-53, is undergoing what economists call "a rolling geographical readjust ment" -- with major dips in some areas erasing gains in others. So far this year, housing starts across the U.S. are down 8% from a year ago despite gains in March and April. But in the West, where a quarter of the nation's new housing is normally concentrated, the decline is much sharper because of earlier overbuilding, cutbacks in defense industries and a slight slowdown in the influx of new families. More than 50,000 completed houses remain unsold in California, according to Bank of America officials. Says Los Angeles Entrepreneur Jerome Snyder: "Builders in trouble here seem to be more the rule than the exception."

Most of this year's decline involves apartment buildings, construction of which had spurted through the early '60s to account for 36% of new housing (a proportion not reached since the 20's). Rental construction is slipping in such major areas as New York, Chicago, Dallas, Seattle, and Washington, D.C.-- but has gained in the suburbs and in smaller cities.

Economists are divided as to whether housing as a whole is about to rebound. Chairman Gardner Ackley of the Coun cil of Economic Advisors forecasts that it will recover this year to something close to the 1964 level of 1,584,000 units. many other experts lean toward the view of James C. Downs Jr., chair man of Chicago's Real Estate Research Corp.: "The market is still oversupplied, and I foresee no dramatic improve ment." One encouraging sign: April con tracts for residential construction, a ba rometer of work to come hit a record $2.1 billin, up to 7-c- from a year ago.

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