WASHINGTON -- Despite downturns in housing production and marketing in the fourth quarter, 1996 was an excellent year for the housing industry, according to a new report by the Department of Housing and Urban Development. A record was set in 1996 for the sale of new and existing homes combined, HUD reports in its quarterly U.S. Housing Market Conditions.

The report says the nation's homeownership rate rose 0.7 percentage points in 1996, following an identical rise in 1995. The overall homeownership rate was 65.4 percent, nearly reaching the all- time record set in 1980 before the decade-long decline in homeownership began.

The report shows that even though single-family housing starts declined 5 percent in the fourth quarter, they still had their second-best year since 1986.

HUD reported that new homes are larger and have more amenities than new homes of earlier years. The aggregate value of new homes in 1996 exceeded the value of homes in any earlier year, except 1994. The 1996 home was typically a trade-up home, while the typical 1978 home was a starter home. The average square feet in new homes shows a 20 percent increase from 1755 square feet in 1978 to 2100 square feet in 1996.

The HUD report examines market conditions for 10 regions of the country and highlights selected metropolitan areas in each region: Boston, MA; Albany-Schenectady-Troy, NY; Washington, DC; Louisville, KY; Ann Arbor, MI; Las Cruces, NM; Des Moines, IA; Colorado Springs, CO; Phoenix, AZ; and Spokane, WA.

Nationally, building permits decreased 2 percent in the fourth quarter of 1996, but the 1,430,900 units permitted in 1996 made it the best year since 1988. Manufactured (mobile) home shipments were up approximately 9 percent over last year. Multifamily housing construction is at a modest level by historical standards.

HUD's regional economists report that 1996 was one of the best years in the past seven years for housing sales.

Sales of existing homes were especially strong in the Boston area. Washington DC and its surrounding area ended the year as the fourth-largest volume market nationally. Atlanta remained the hot market in the Southeast.

The Midwest region had its highest level of home construction since 1978. California's housing market sales continued to improve, racking up the best performance since 1989.

The rental housing market held firm in much of the country. Tighter market conditions in Boston made rental housing construction feasible for the first time in years. Midwest apartment building was at its highest level in seven years. Texas also had high volumes of apartment construction.

There are signs that previously hot rental markets are starting to cool off. Large multifamily housing production volumes are causing concern in some markets in the Southeast, Southwest, and Rocky Mountain regions. There have been significant reductions in construction in the Orlando, Miami-Fort Lauderdale, Atlanta, and Raleigh-Durham areas. The Austin and Albuquerque rental markets have softened due to an oversupply of new high-rent apartments. In Denver, new apartment projects are continuing to fill, but rent concessions are widespread.

U.S. Housing Market Conditions brings together data from the housing, real estate, and primary and secondary mortgage markets. Data are collected from housing organizations such as the National Association of Homebuilders, the National Association of Realtors, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Other data come from HUD, the Census Bureau and the Commerce Department.

The report, issued quarterly, is available by subscription at a cost of $30 per year. Write HUD USER, PO Box 6091, Rockville, MD 20849, or call HUD USER at 1(800)245-2691.