Home construction rises again - East Valley Tribune: Business

Home construction rises again

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Posted: Thursday, February 20, 2003 8:13 am | Updated: 1:00 pm, Thu Oct 6, 2011.

WASHINGTON - Powered by the lowest mortgage rates in four decades, new home construction in January hit the highest level since 1986, the government reported Wednesday.

The Commerce Department said work was started on 1.85 million new single-family homes and apartment units at a seasonally adjusted annual rate last month. That was a 0.2 percent increase from December, when housing construction shot up 4.9 percent from the month before.

Construction in the singlefamily sector rose a solid 2.1 percent to an annual rate of 1.51 million units, the fastest pace in more than two decades. Construction of apartments actually fell by 8.7 percent to an annual rate of 303,000 units.

The overall rate of 1.85 million units was the best showing since May 1986.

Sales of both new and existing homes set records last year as buyers seized upon mortgage rates not so low since the early 1960s. In addition, home prices have risen as the stock market has declined.

‘‘With sales at or near record levels and prices still rising, you would expect that new construction activity would be robust and it is,’’ said Joel Naroff, chief economist at Naroff Economic Advisors.

David Seiders, chief economist for the National Association of Home Builders, said there may be some setback in the February construction activity because of the recent severe snowstorm in the Northeast.

He also said growing worries about a possible war in Iraq may make people cautious about committing to a big-ticket purchase such as a home.

But he said this slowdown will be temporary and be offset by continued low interest rates.

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