Housing Starts Rise 2.2 Percent

Wednesday, December 20th 2000, 12:00 am

By: News On 6

WASHINGTON (AP) â€” Housing construction rose a solid 2.2 percent in November, the biggest jump in nine months, as builders broke ground on more new apartments and condos but fewer single-family homes.

The Commerce Department reported Wednesday that builders began work on all new homes at a seasonally adjusted annual rate of 1.56 million last month, a 2.2 percent increase from October.

Starts of single-family homes slipped by 0.4 percent in November to a seasonally adjusted annual rate of 1.22 million, while starts of apartments, condos and other multifamily housing projects increased by a strong 12.9 percent to a rate of 342,000.

On Wall Street, fears about a harsh economic slowdown and continuing weakness in corporate earnings sent stocks sliding. The Dow Jones was down 172 points in morning trading.

Many economists were expecting only a small rise in all housing starts in November.

The 2.2 percent increase in housing starts, fueled entirely by the West, marked the biggest increase since a 4.5 percent rise in February. The 1.56 million level was the highest since 1.57 million in June.

In October, housing construction fell by 0.6 percent, according to revised figures, weaker than the government previously reported.

Cheaper mortgage rates helped builders last month. The average interest rate on a 30-year fixed rate mortgage was 7.75 percent in November, down from 7.79 percent in October but up a tad from 7.74 percent in November 1999.

Despite cheaper mortgage rates, the National Association of Home Builders, in a survey released Tuesday, said that builders in December are less confident about the market for new homes.

Builders said they are worried that the recent decline in consumer confidence, stock market volatility and rising energy costs will dampen sales.

Between June 1999 and May of this year, the Federal Reserve boosted interest rates six times in an effort to slow the economy and keep inflation at bay.

On Tuesday, the Fed essentially declared an end to its inflation-fighting campaign and shifted its focus to preventing the economy, which slowed dramatically in the third quarter, from stalling.

Economists believe housing starts and home sales will slow this year but still remain at healthy levels.

By region, all parts of the country reported declines in housing starts except for the West, where they rose.

In the Northeast, new housing construction fell by 10.9 percent to a seasonally adjusted annual rate of 139,000 in November. In the South, they declined by 5.2 percent to a rate of 680,000 and in the Midwest they fell by 1.9 percent to a rate of 314,000. But in the West, housing starts rose 28.1 percent to a rate of 429,000.

New building permits, a sign of future construction activity, rose by 2.6 percent in November to a rate of 1.59 million, following a 1.8 percent rise the month before.