Builders post gain in housing
Published: Wednesday, January 22, 2003 at 6:01 a.m.
Last Modified: Tuesday, January 21, 2003 at 10:17 p.m.
WASHINGTON - Construction of new homes and apartments posted an unexpectedly strong gain of 5 percent in December as the housing industry wrapped up its best performance in 16 years, a building boom fueled by the lowest mortgage rates in four decades.
The Commerce Department reported Tuesday that construction activity climbed to an annual rate of 1.84 million units in December, the highest monthly pace since June 1986 and well above economists' expectations.
In addition, the government revised November activity higher to show builders were starting new units at an annual rate of 1.75 million units during that month, 5.2 percent above the October level.
For all of 2002, builders began construction on 1.70 million new homes and apartments, a 6.4 percent gain from the 1.60 million units constructed in 2001. It was the best year for construction of single-family homes and apartments since 1.81 million units were built in 1986.
For just single-family homes, the 1.36 million units that were begun in 2002 represented the strongest performance since 1978 when builders broke ground on 1.43 million single-family homes.
"What started off robustly ended even more strongly, if that's possible," said Joel Naroff, chief economist of a Holland, Pa., forecasting firm. "During the year, housing starts reached levels not seen since the baby boomers hit the market in the 1970s."
All parts of the country shared in the building boom with construction of single-family homes setting an all-time high in the South.
David Seiders, chief economist for the National Association of Home Builders, said builders were optimistic that 2003 will be another good year, although down slightly from 2002.
Sales of both new and existing single-family homes are on track to set records for all of 2002. Seiders said he expected sales would be down in both categories by about 3 percent in 2003, reflecting a slight rise in interest rates as the economy gains strength.
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