January Housing Starts Jump 6.3 Percent
By Mark Felsenthal
Reuters
WASHINGTON (Feb. 19) - Housing starts topped expectations in January, surging 6.3 percent to hit their fastest pace in nearly two years, as housing activity -- credited along with consumer spending for blunting the impact of the recession -- showed no signs of flagging.
"Part of it may be explained by favorable weather, but it may be more fundamental than that. It reflects (low)...mortgage rates and willingness on part of consumers to spend," said Michael Carliner, an economist for the Washington-based National Association of Home Builders.
Builders began work on new homes at a seasonally adjusted annual rate of 1.678 million units last month, up from a revised 1.579 million rate in December, the Commerce Department said Tuesday. The pace drubbed the expectations of analysts polled by Reuters, who forecast January starts at a rate of 1.600 million.
While the NAHB does not expect starts to continue at the blistering annual pace set in January, when warm weather did play a role, the organization anticipates groundbreaking for the whole of 2002 will match last year's solid performance.
The U.S. economy, in recession since March, has recently shown some signs of recovery, but has been consigned to a two-steps-forward-one-step-back dance due to nagging worries.
Last week, reports showed a rise in January retail sales minus cars and a drop in weekly jobless claims, but optimism was tempered by a dip in factory output last month.
Meanwhile, corporate accounting jitters, the legacy of the spectacular implosion of energy-trader Enron, persisted amid questions about accounting practices at companies ranging from International Business Machines Corp. to graphics chip maker Nvidia Corp.
A separate report released on Tuesday revealed that debt-burdened individuals and businesses went bankrupt in record numbers last year. The Administrative Office of the U.S. Courts said the total number of bankruptcies filed in 2001 jumped 19 percent to 1.49 million from 1.25 million in 2000.
That easily surpassed the previous record of 1.44 million bankruptcy filings in 1998.
LOW INVENTORIES, LOW RATES
Housing activity has purred along despite the economic slump thanks to strong demand, low inventories and low interest rates that give homeowners an advantage.
Despite recent signs of economic recovery, long-term interest rates, since hitting three-decade lows in November, have hovered near 7 percent or below. In the week ending Feb. 15, the 30-year fixed-rate mortgage stood at 6.86 percent.
"The understanding is the economy is in fairly good shape, but there's no real concern yet about (interest-rate) tightening by the (Federal Reserve)," said John Spinello, fixed-income strategist at Merrill Lynch Government Securities.
U.S. Treasuries fell on the unexpectedly strong housing starts news as traders sold longer-dated securities.
The last time the pace of new starts was faster was February 2000, when builders broke ground at a 1.745 million rate. Building permits, a gauge of future activity, rose 3.1 percent in January to a 1.706 million seasonally adjusted annual rate, up from 1.654 million in December. This was the highest since January 2001, when the pace was 1.724 million.
Regionally, housing starts jumped 14.4 percent in the South to a pace of 800,000, the highest level of building activity since January 2000. The South tends to boast the biggest number of starts, with more than double the number of any other area.
Starts increased by 8.7 percent in the Northeast, but fell by 3.6 percent in the West and by 0.3 percent in the Midwest.
Groundbreaking on single-family homes rose 3.5 percent to a seasonally adjusted annual pace of 1.345 million units, while multi-family starts rose by 8.3 percent to 287,000 units.
12:31 02-19-02
Copyright 2002 Reuters Limited. |
