Flooring News and Information

Washington, DC, Dec. 18—Housing construction jumped by 8.2% in November to the highest level since January. Last month, builders broke ground on a seasonally adjusted annual rate of 1.65 million housing units, according to the Commerce Department.

The increase was larger than anticipated, and occurred as consumer confidence fell to a seven and a half year low in November and the employment picture worsened. The nation's unemployment rate climbed from 5.4% to 5.7% and payrolls fell sharply.

Low mortgage rates are a key reason that the housing and construction markets have remained stable even though the national economy has been in recession since March. The average interest rate on a 30 year fixed rate mortgage was 6.7% in November, compared with 7.7% for the same month a year ago.

Builders say low interest rates and solid appreciation in housing values are motivating new home buyers. A survey released this week by the National Association of Home Builders cited these factors as reasons that builders are more optimistic about sales prospects for December as well as for the next six months.

''The very favorable interest rate environment and strong investment potential of homeownership are proving to be powerful incentives for buyers whose jobs have not been impacted by recent economic weakness,'' said Bruce Smith, president of the National Association of Home Builders.

Still, “builders remain concerned about the situation in some markets, particularly in the Midwest, where job losses have been most concentrated,'' Smith added.

The 8.2% rise in housing construction, which followed a 4% drop in October, pushed the level of starts to the highest point since January, when they grew at a rate of 1.67 million units. In November, construction of single family homes rose 3.2% to a rate of 1.26 million units, after registering a 3.4% decline the month before.

Construction of apartments, condominiums and other multifamily housing rose 30.1% last month to a rate of 346,000, following a 2.9% drop in October.

By region, housing starts rose by 20.1% in the Northeast to a rate of 173,000. In the Midwest, they grew by 20.5% to a rate of 382,000, and in the West, starts rose by 12.7% to a rate of 372,000. But in the South, they fell by 1.6% to a rate of 718,000.