11/20 08:30
U.S. October Housing Starts Fall 11.4% to 1.603 Million Pace
By Monee Fields-White and Carlos Torres
Washington, Nov. 20 (Bloomberg) -- U.S. home construction fell in October to the lowest level this year after surging a month earlier to the highest since 1986, government figures showed.
Builders broke ground on new homes at an annual pace of 1.603 million units last month, the Commerce Department said. That was down 11.4 percent from September's revised 1.810 million pace and was the lowest since 1.583 million in December. Construction of single-family homes declined and apartment building and other multifamily starts fell.
Some 1.444 million homes have been started so far this year compared with 1.377 million in the same 10 months in 2001. While housing probably won't contribute much to economic growth in coming months, falling mortgage rates will probably keep the pace of construction elevated, economists said.
``As long as housing doesn't fall apart, it continues to provide support for the economy,'' said Dan Seto, senior economist at Sumitomo Life Invest Co. Ltd. in New York, before the report. ``We are in the tail end of the lift from mortgage rates.''
Housing makes up more than half of all U.S. construction and provides a support for the economy through spending on building materials, furniture and appliances.
Building permits, a gauge of future construction, rose 1.7 percent to a 1.763 million annual rate, compared with 1.733 million a month earlier.
Economists had expected starts to fall in October to 1.715 million units at an annual rate from a previously reported 1.843 million in September. The September rate was the highest since 1.833 million in December 1986.
October starts of single-family homes fell 7 percent to 1.350 million rate from September's 1.452 million pace. Construction of apartments and other multifamily homes fell 29.3 percent to a 253,000 annual rate.
Starts by Region
By region, starts fell 14.3 percent in the South, 19.5 percent in the Midwest, and 18.8 percent in the Northeast. They rose 3.6 percent in the West.
Federal Reserve policy makers reduced interest rates twelve times since the start of last year, pushing down mortgage rates. They're still falling. The 30-year fixed mortgage rate fell to 5.94 percent last week, the lowest since 1971, when Freddie Mac began keeping records.
Centex Corp., the No. 2 U.S. homebuilder by stock market value, said yesterday that its sales for the first seven weeks of the quarter ending Dec. 31 were 27 percent higher than the same period last year.
D.R. Horton Inc., the No. 4 U.S. homebuilder by stock market value, last week said its fiscal fourth-quarter earnings rose a better-than-expected 57 percent, and that profits will exceed analysts' estimates next year. Beazer Homes USA Inc., earlier this month, reported a 3.9 percent gain in October orders, while KB Home saw a 14.8 percent jump.
Home Sales
Sales of new single-family homes rose in September to a record annual pace of 1.021 million, the Commerce Department said last month. Builders are likely to sell 953,000 new homes in 2002, exceeding last year's record 908,000, according to the National Association of Home Builders.
The group's homebuilder optimism index rose in November to the highest level in two years. The housing market index rose to 65 this month, the highest since November 2000, from 63 in October. Scores above 50 indicate that more builders view conditions as good than view them as poor.
Next year, home sales may total 931,000, according to the homebuilders' group. Starts are expected to decline to 1.63 million next year from 2002's 1.687 million, the group said. |
