With winter approaching, home insulation sales are down.People are confused by conficting claims, afraid of fire and other hazards, and wary of ripoffs by fast-talking contractors.

"For the fall season our sales were probably down 70 percent," said Steve Lewis, sales manager for Woodward & Lothrop's insulation contractor. "Last year at this time we told people we couldn't do their work for 14 to 16 weeks. Now we tell a customer we can have it done within 10 days."

"It has not been a good year for the insulation industry," said John A. (Jeff) Davis of Surfa-Shield insulation company in Fairfax. "There is a fantastic confusion about insulation products and if I were a consumer knowing little or nothing about it I would do nothing . . . until the air has cleared."

"Gerald McDonald of Capitol Insulation in Silver Spring, head of the National Association of Home Insulation Contractors, said that many of the small contractors who began operating after the 1973 Arab oil embargo are now going out of business.

"Business right now is slow," he said. "There is activity but it is not what should be developing with the tax credit." The new federal energy act allows a substantial tax credit for homeowners who install insulation.

Davis and McDonald blame federal officials for much of the confusion and downturn in sales.

"Eleven separate agencies or departments of te federal government regulate, advise [on] and test insulation," said Davis. "There's been a huge conflict in the government itself . . . As a result of all this people have been turned off insulation and the president's program has been defeated."

When President Carter announced his national energy plans in April 1977, officials said 90 per cent of the nation's homes were not properly insulated. The goal was to correct this by 1980 and to make sure all new homes are properly insulated, too.

Insulation sold well the winter before the announcement and the winter after. Nearly 7 million homes were insulated in 1977 alone, but now it seems that the administration will fall far short of meeting its 1980 goal.

"The warehouses are bursting at the seams [with insulation], maybe the big boom is over," said Harry Cohen of the U.S. Consumer Product Safety Commission. "Our economists think it's a long-term downward trend [in sales]. All sectors of the insulation market are affected . . .

"For whatever reasons, maybe consumers feel insulation has been oversold. [A magazine reported that] people were told to insulate to fantastic levels that were not necessary. After a certain point the payback is very long."

By "payback," Cohen means the time it takes for an insulation job to pay for itself in energy savings. Maxine Savitz of the U.S. Department of Energy said insulation installed in Washington-area homes will generally pay for itself in two to five years.

Savitz also said the sales picture is not entirely bleak. She said "sales seem to be stronger" this quarter than they were in the first three quarters, although they still lag substantially behind last year's levels.

As an example of the kind of confusion that exists, insulation man McDonald pointed to the multi-color cover photo of a man installing attic insulation-a photo that appeared on the cover of a paperback book called "Saving Home Energy: 300 Ways to Cut Costs and Increase Efficiency."

The man is laying pads or "batts" of insulation between the joists on the floor of his attic, but is doing so incorrectly-according to McDonald-because he has the vapor barriers facing up instead of down.

A vapor barrier is a waterproof sheet of foil or some other material attached to one side of the insualtion pad. Its purpose is to prevent the hot moist air from inside the house that passes up through the ceiling from condensing in the insulation pad itself. Getting an insulation pad wet destroys much of its insulating quality.

"We had quite a controversy over that," recalled Karen Irons, who edited the "Saving Home Energy" book for its publisher, Oxmoor House, Inc. in Brimingham, Ala. "The author kept telling us it was all right and people kept writing in and saying it was wrong. We have, with the revised edition, gone to a new cover."

The confusion hardly stops there, however.

For one thing, some insulation comes with a "vapor barrier" that is made of paper and is not waterproof, according to insulation man Davis. Water can pass through such a barrier into the fiberglass insulation itself, which absorbs it "like a sponge" and is thus rendered "virtually ineffective" as an insulating material, Davis said.

Even if the vapor barrier is waterproof, a perfect seal is never made between it and the joists during installation. The moist air rises through the imperfectly sealed spaces between the insulation pads and the joists-again wetting the insulation.

Davis emphasizes the importance of good attic ventilation to combat these conditions. And McDonald says his association, which represents more than 200 small contractors nationally, seeks to "upgrade the standards" followed in installing insulation.

For the homeowner, all this spells confusion. At the very least he must hire a competent contractor.

Even that may not be enough, according to Larry Wasson, a construction expert who runs Guaranteed Home Inspection Service in Northwest Washington. Wasson's studies have led him to fundamental questions about "retrofitting" existing houses with insulation and weatherstripping.

"If a house doesn't have vapor barriers to start with it's almost impossible to create them," he said. "I promise you that if you can't establish a reasonable vapor barrier your insulation is an expensive luxury. It isn't going to do what they say it will, and in a lot of cases it can cause some severe structural damage."

Wasson's main concern is with a foam made of urea and formaldehyde that is pumped into walls to insulate them. Since the walls in older houses almost never have vapor barriers, he said, moist air penetrates the walls, condenses in the foam and destroys its insulating ability. It addition, it can create rot.

He said that even in newer houses where vapor barriers are built into the walls, they are put in just behind the drywall on the interior side of the house. This is fine for stopping moist air that tries to go out through the wall during the winter, but what about the hot moist air that seeks to go in during the summer when the air conditioning has cooled the inside?

Wasson says a second vapor barrier-just inside the exterior sheathing-is needed to prevent this moist air from entering the insulation, condensing there when it hits the cool vapor barrier behind the inside wall, and doing its damage.

Beyond all this, says Wasson, even when proper vapor barriers have been established behind walls they may not be ideal since the moisture is caught in the plaster wall, causing cracking and peeling paing. The ideal, he said, would be to use a special paint on the interior walls that created a perfect seal and served as a vapor barrier-so the moisture would never penetrate the walls at all.

Wasson has even questioned such old standbys as weatherstripping, saying that if this is done too thoroughly without providing an outside air source for the gas furnace, then oxygen deprivation may result inside the house-a health hazard.

DOE's Savitz said studies on this indicate that oxygen deprivation in tightly sealed houses "does not appear to be a problem" because even in the most tightly sealed houses "there are still leaks" providing oxygen from the outside.

Whoever is right in these disputes, the public appears to have withdrawn to a watchful, waiting posture.

"When you start talking about something this complicated, people just say, 'Enough!" said Wasson. "People tell me, 'It's like doing your taxes.'"