Newspaper article THE JOURNAL RECORD

Housing Starts Down 7.2% in January

Newspaper article THE JOURNAL RECORD

Housing Starts Down 7.2% in January

Article excerpt

WASHINGTON (AP) _ Construction of new homes fell 7.2 percent in January, the government said Wednesday. Analysts attributed the drop to bad weather and an unsustainable increase in building in December.

Unless the weather turns bad again this month, these analysts added, housing starts should turn up again, boosted by favorable mortgage rates and a gradually improving economy.

"The economy is growing more strongly, interest rates remain low and consumer confidence continues to be high," said economist David Berson of the Federal National Mortgage Association. "All that will translate into more starts."

The Commerce Department reported that starts totaled 1.19 million at a seasonally adjusted annual rate in January, the lowest level since last July when new construction dipped to a 1.11 million rate. Last month's decline was the largest since starts fell 16.9 percent last April.

Starts were down sharply in both the Northeast and West. They also fell in the Midwest, but rose in the South.

"Hopefully, this starts number was an aberration," said David Lereah, an economist with the Mortgage Bankers Association. "Our projection is well over 1.3 million (for 1993). But it's not a good way to start the new year."

Analysts noted that starts had jumped 4.8 percent in December, to a 1.29 million annual rate, and ended the year 18.4 percent above those in 1991. But they contend growth this year will be only about 9 percent and the 4.8 percent advance in December overstated the industry's strength.

Sales of both new and previously owned homes rose in December, reducing inventories and providing incentives for further building.

At the same time, mortgage rates are at a 20-year low, and the Mortgage Bankers Association says loan applications, a leading indicator of sales, remain strong.

Applications for building permits, often a barometer of future activity, edged down 1. …

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