U.S. September Housing Starts Rise 13.3% to 1.843 Million Pace
By Monee Fields-White and Carlos Torres
Washington, Oct. 17 (Bloomberg) -- U.S. home construction rose in September to the highest level in 16 years as low mortgage rates led to more work on single-family housing, government figures showed.
Builders broke ground on new homes at an annual pace of 1.843 million units last month, the Commerce Department said. That was up 13.3 percent from August's revised 1.627 million pace. Construction of single-family dwellings surged 18.2 percent to 1.477 million, the highest in almost 24 years. Multi-family starts fell.
Mortgage rates, which are the lowest since at least 1971, are encouraging consumers to buy new homes. Such purchases may lead to increased spending on building materials, furniture and home appliances, contributing to the economy's recovery.
``This is a positive sign that consumers, who say they are not confident, are confident enough to make major purchases,'' said Scott Brown, an economist at Raymond James & Associates in St. Petersburg, Florida, before the report. ``And this will help the recovery to continue.''
Building permits, a gauge of future construction, rose 3.7 percent to a 1.727 million annual rate, the highest since February, compared with 1.666 million a month earlier.
Economists had expected starts to rise 1.9 percent in September to 1.64 million units at an annual rate from a previously reported 1.61 million in August. Housing accounts for more than half of all U.S. construction.
Single-Family Surge
The surge in single-family starts came as builders broke ground on homes that had been authorized earlier. In August, the number of homes for which construction permits had been issued but on which work hadn't started rose to the highest level in 15 years.
September starts of apartments and other multifamily homes declined 2.9 percent to a 366,000 annual rate.
By region, starts rose 9.8 percent in the South, 11.4 percent in the Midwest, 24.2 percent in the West and 9.5 percent in the Northeast.
The average interest rate on a 30-year fixed mortgage dropped in September to 6.09 percent. The rate has fallen below 6 percent this month, the lowest since Freddie Mac, the No. 2 buyer of U.S. mortgages, started keeping records in 1971.
Based on sales so far this year, builders will sell 936,000 new homes in 2002, exceeding the record 908,000 sold last year, according to the National Association of Home Builders.
The housing market is strong in the East, especially in the Atlanta area, Lennar Corp. Chief Executive Officer Stuart Miller said last week in an interview with Bloomberg Television. He said the market is weak in Texas, where Miami-based Lennar has 15 percent to 20 percent of its business.
Slower Pace Expected
Some economists and builders expect the pace of home sales to slip by next year. In 2003, 906,000 new homes may be sold, according to the homebuilders' group.
After slowing in the second quarter, the economy's expansion probably picked up to a 3.6 percent annual rate from July through September, according to the October Blue Chip Economic Indicators survey of economists. The group forecast a 2.2 percent growth pace for the final three months of the year.
The uneven pace of the recovery has taken a toll on consumer confidence, which fell in September for a fourth straight month to the lowest in 10 months. Consumers are worried about the slow pace of job growth. After declining in September for a second month, the unemployment rate will probably average 6 percent in the final months of the year, based on the median of 51 forecasts in a Bloomberg News survey.
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By Monee Fields-White and Carlos Torres
Washington, Oct. 17 (Bloomberg) -- U.S. home construction rose in September to the highest level in 16 years as low mortgage rates led to more work on single-family housing, government figures showed.
Builders broke ground on new homes at an annual pace of 1.843 million units last month, the Commerce Department said. That was up 13.3 percent from August's revised 1.627 million pace. Construction of single-family dwellings surged 18.2 percent to 1.477 million, the highest in almost 24 years. Multi-family starts fell.
Mortgage rates, which are the lowest since at least 1971, are encouraging consumers to buy new homes. Such purchases may lead to increased spending on building materials, furniture and home appliances, contributing to the economy's recovery.
``This is a positive sign that consumers, who say they are not confident, are confident enough to make major purchases,'' said Scott Brown, an economist at Raymond James & Associates in St. Petersburg, Florida, before the report. ``And this will help the recovery to continue.''
Building permits, a gauge of future construction, rose 3.7 percent to a 1.727 million annual rate, the highest since February, compared with 1.666 million a month earlier.
Economists had expected starts to rise 1.9 percent in September to 1.64 million units at an annual rate from a previously reported 1.61 million in August. Housing accounts for more than half of all U.S. construction.
Single-Family Surge
The surge in single-family starts came as builders broke ground on homes that had been authorized earlier. In August, the number of homes for which construction permits had been issued but on which work hadn't started rose to the highest level in 15 years.
September starts of apartments and other multifamily homes declined 2.9 percent to a 366,000 annual rate.
By region, starts rose 9.8 percent in the South, 11.4 percent in the Midwest, 24.2 percent in the West and 9.5 percent in the Northeast.
The average interest rate on a 30-year fixed mortgage dropped in September to 6.09 percent. The rate has fallen below 6 percent this month, the lowest since Freddie Mac, the No. 2 buyer of U.S. mortgages, started keeping records in 1971.
Based on sales so far this year, builders will sell 936,000 new homes in 2002, exceeding the record 908,000 sold last year, according to the National Association of Home Builders.
The housing market is strong in the East, especially in the Atlanta area, Lennar Corp. Chief Executive Officer Stuart Miller said last week in an interview with Bloomberg Television. He said the market is weak in Texas, where Miami-based Lennar has 15 percent to 20 percent of its business.
Slower Pace Expected
Some economists and builders expect the pace of home sales to slip by next year. In 2003, 906,000 new homes may be sold, according to the homebuilders' group.
After slowing in the second quarter, the economy's expansion probably picked up to a 3.6 percent annual rate from July through September, according to the October Blue Chip Economic Indicators survey of economists. The group forecast a 2.2 percent growth pace for the final three months of the year.
The uneven pace of the recovery has taken a toll on consumer confidence, which fell in September for a fourth straight month to the lowest in 10 months. Consumers are worried about the slow pace of job growth. After declining in September for a second month, the unemployment rate will probably average 6 percent in the final months of the year, based on the median of 51 forecasts in a Bloomberg News survey.
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