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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: MSI who wrote (8324)	1/21/2003 5:26:53 PM
From: calgal	Read Replies (1) \| Respond to of 306849

New-home construction rose 5% in December to 1.8M rate URL:http://www.usatoday.com/money/economy/housing/2003-01-21-new-homes_x.htm WASHINGTON (AP) — Construction of new homes and apartments rose a solid 5% in December to cap the best year for housing construction since 1986, the government reported Tuesday. The Commerce Department said builders broke ground on 1.84 million new home homes and apartments at a seasonally adjusted annual rate in December, compared with a 1.75 million unit pace in November, when activity had risen 5.2% from October. For the year as a whole, work was started on 1.7 million homes and apartments, up 6.4% from 2001 and the best year for home builders since 1986, when 1.81 million units were built. The activity was bolstered by the lowest mortgage rates since the early 1960s, which fueled a boom in housing construction and sales. "Start with the lowest mortgage rate in decades, add some positive income growth, throw in a pinch of favorable tax treatment of capital gains on homes, top that off with a record of strong price appreciation — these produce extraordinary numbers," said Ken Mayland of Clearview Economics. Housing was one of the few bright spots for the economy last year as the country endured an uncertain recovery from the 2001 recession. The unemployment rate at year's end stood at an eight-year high 6% and many analysts believe it will go higher because of concerns about war in Iraq and a resulting rise in oil prices. Thirty-year mortgage rates last week, according to a survey by Freddie Mac, averaged 5.97%, up slightly from the four-decade low 5.85% at the beginning of the year. Analysts believe rates will move slightly higher this year and for that reason they are predicting that sales of both new and existing homes, expected to set records for 2002, will dip in 2003. The latest report on housing starts shows that builders began construction at a seasonally adjusted annual rate on 1.47 million single-family homes in December, up 4.9% from November's pace. That was the best monthly building pace for single-family homes since November 1978. The pace of apartment construction rose 3.9% in December, compared with November, to a seasonally adjusted annual rate of 321,000 units, strongest pace since August. By region, housing construction was up in all areas, led by an 18.2% jump in the Northeast, where construction climbed to an annual rate of 169,000 units. Construction of homes and apartments rose 9.7% in the West to an annual rate of 471,000 units. The Midwest saw a 4% increase, to an annual rate of 390,000 units in December while the South recorded the smallest gain in construction in December, 0.6%, which pushed activity to an annual rate of 805,000 units. Contributing: Reuters Copyright 2003 The Associated Press. All rights reserved.