Washington,
DC, Oct. 17—Housing construction rose in September despite new uncertainties
about consumers' willingness to make big ticket purchases in the wake of the
terror attacks and mounting layoffs. According to the Commerce Department,
builders broke ground on a seasonally adjusted annual rate of 1.57 million
housing units last month, a 1.7% increase. That followed a sharp 6.7% drop in
August.
Many analysts were expecting housing starts to fall by around 2% in September on
the belief that builders would hold off on new projects, given new economic
uncertainties created by the September 11 attacks. In their aftermath, layoffs
have soared, retail sales have dropped and consumer and business confidence in
the economy have been badly shaken.
In September, single family home construction increased by 0.6% to a seasonally
adjusted annual rate of 1.27 million in September. Construction of condominiums,
apartments and other multifamily housing rose by 2.7% to a rate of 270,000.
By region, housing starts jumped by 12.5% in the West to a rate of 423,000 and
they were up by 7.6% in the South to a rate of 732,000. But in the Midwest,
starts plunged by 16.6% to a rate of 282,000. In the Northeast, they declined by
11% to a rate of 137,000.
Last week the average interest rate on 30 year fixed rate mortgages fell to
6.58%, the ninth week in a row that 30 year mortgages were below the 7% mark,
according to the nationwide survey by mortgage company Freddie Mac.
Even against the backdrop of low interest rates, the National Association of
Home Builders said the attacks were cutting into the demand for new homes.
Builders said they were a lot less optimistic about sales for October and for
the next six months.
“Like the rest of the economy, the housing market is clearly showing the
effects of the September 11 Attack on America,” said the association's
president, Bruce Smith. Many builders said new home sales had declined in the
wake of the attacks. “The primary reasons that they cited were lower consumer
confidence, a weaker economy and job market and the declining stock market,”
said Smith.
Housing permits, a good barometer of demand, fell by 3% in September to a rate
of 1.52 million, the lowest level since December 1997.
Copyright
2001 Floor Focus Inc
