The housing market will lead the U.S. into financial recovery during the first four months of 1991. Here's how and why:

Amid general concern about a faltering economy, the Federal Reserve has finally seen the light and is lowering interest rates across the board. Enter housing into the equation.The Fed knows that housing has always led the U.S. out of any economic slowdown or recession. Because the banking regulators are concerned about questionable commercial real estate loans, single-family home mortgages are emerging as a safe haven for lending with extremely low borrower defaults.

"Consumer first mortgages are the loan of choice among financial institutions, because they are safe, especially when compared with loans on office buildings or ski resorts," said Robert Holzer, president of NBD Mortgage Company of Illinois, a division of the National Bank of Detroit.

The net result is that today mortgage rates are tumbling. Now, more than ever, there's a window of opportunity for homebuyers, especially the first-time buyer, to make a good deal.

"Mortgage rates have come down dramatically in the last week and have hit their lowest levels in almost 12 years," said John Tuccillo, chief economist for the National Association of Realtors (NAR) in Washington, D.C. "These low rates, which will continue into the spring, will provide a hospitable backdrop for a housing recovery when consumers return."

The media have totally overblown the current housing slump. While sales of new homes are abysmally low, the NAR reports the year-to-date sales of existing homes are down only 5 percent nationally, which, of course, includes the depressed East Coast sector.

"The Midwest has yet to see a recession in housing or anything else. There has been a flattening, but nothing that relates to the gloom and doom coming from the East Coast-based media," said Roger Ruthhart, managing editor of the Rock Island Daily Argus. "There may be people here who are concerned about what's going to happen in the next year, but it hasn't changed their buying habits yet."

The multifamily market remains less secure and less attractive for investors, especially with the removal of tax incentives resulting from the Tax Reform Act of 1986.

"Lending for apartment buildings and condominiums is not viewed as safe," said Mark Lasky, senior economist with Data Resources/McGraw-Hill, Inc., based in Lexington, Mass. "But, all the single-family sector needs to get back on its feet is a rebound in confidence."

"An increase in consumer confidence after the Mideast crisis is resolved will coax potential homebuyers back into the market. Houses are getting very affordable, and that will help too," Lasky said. "If you look at what decked the housing market in 1990, it had to be a decline in consumer confidence because mortgage rates really didn't go up dramatically and housing prices declined."

During the mid-1980s, some markets - most notably the East Coast - had been gorging themselves with huge annual appreciation rates of 20 percent plus. There had to be a respite.

And now it's California's turn to feel the heat, since home prices there are way out of whack. New home sales for July through October in the West were down 38 percent from the same time a year ago, and new single-family construction has started to slow as well.

But, the rest of the nation, which did not see home prices skyrocket, is doing all right, and the strongest sector has been the Midwest.

"The Midwest has been doing very well for the last couple of years," Lasky said. "If you look at existing home prices for the last year and a half, the Midwest has been outpacing the rest of the country. Furthermore, sales of new homes have declined less in the Midwest than in the rest of country."

The fact remains: Your home is not only your place to live, but also your nest-egg. If you think of it as a get-rich-quick investment, you'll get burned.

Reader questions will be answered and may appear in this column, when mailed to Gary S. Meyers at 308 W. Erie, Suite 300, Chicago, IL