Washington,
DC, Sept. 20—New housing construction dropped in August by the largest amount
in 17 months as the faltering economy made builders and prospective home buyers
more cautious. The number of new housing units fell by 6.9% last month to a
seasonally adjusted annual rate of 1.53 million, according to the Commerce
Department. The drop was the largest since March 2000 and left housing starts at
their lowest level in ten months.
In July, housing construction rose by 0.4%, according to revised figures. But
that was much weaker than the 2.8% jump the government had previously reported.
Housing activity, helped out by low interest rates, has been a pillar helping to
support the economy.
But the September 11 attacks on the World Trade Center and the Pentagon could
change that. Builders say that are monitoring the situation closely to get a
better idea of the attacks' impact on consumer confidence, employment and demand
for homes.
The attacks intensified fears that the economy, which was already in bad shape
before the strikes, could tip into recession if consumers and businesses sharply
cut spending. Consumer spending accounts for two thirds of all economic
activity.
Even before the attacks, builders said they were less optimistic about sales for
September as well as in the next six months. Economists say that people may feel
less inclined to make big ticket purchases, such as homes, given rising
unemployment.
In August, single family home construction fell by 2.4% to a rate of 1.25
million, following a 1.1% decline the month before. Construction of condos,
apartments and other multifamily housing fell by nearly 23% in August.
By region, housing starts fell by nearly 14% in the South to a seasonally
adjusted annual rate of 666,000. In the Northeast, they declined by 7.7% to a
rate 155,000 and in the West, housing construction dipped by 3.7% to a rate of
367,000. But in the Midwest, construction rose by 6.6% to a rate of 339,000.
Low interest rates have helped to keep housing activity stable despite the
economic slowdown, which started in the second half of last year. In August, the
average rate on a 30 year fixed rate mortgage was 6.95%, down from 8.02% for the
same month a year ago.
Copyright
2001 Floor Focus Inc
