Housing Construction Up Slightly

WASHINGTON (AP) â€” Housing construction inched up in October as builders boosted projects involving apartments and condos but scaled back work on single-family homes. <br><br>The Commerce Department reported

Friday, November 17th 2000, 12:00 am

By: News On 6

WASHINGTON (AP) â€” Housing construction inched up in October as builders boosted projects involving apartments and condos but scaled back work on single-family homes.

The Commerce Department reported Friday that builders began work on new homes at a seasonally adjusted annual rate of 1.53 million last month, a slim 0.1 percent increase from September.

Many analysts had been expecting that September's strong 0.7 percent increase would be matched in October.

Starts of single-family homes fell by a modest 0.2 percent in October to a seasonally adjusted annual rate of 1.2 million, while starts of apartments, condos and other multifamily housing projects rose by 1.3 percent to a rate of 305,000.

The Federal Reserve has boosted interest rates six times since June 1999 to slow the economy and keep inflation under control. The Fed's rate increases are designed to raise borrowing costs and dampen demand for big-ticket items such as homes and cars.

Citing evidence of moderating growth, the Fed on Wednesday decided to leave interest rates unchanged. But the Fed held the door open to further rate increases in the future, citing concerns that rising energy prices and tight labor markets could trigger inflation.

Economists expect housing starts and home sales, which have been an engine of the robust economy, to decline this year but still remain at healthy levels.

The tiny 0.1 percent advance in October's housing construction came despite a slight slip in mortgage rates.

In October, the rate on a fixed-rate 30-year mortgage averaged 7.8 percent, down a little from the average 7.9 percent rates posted in September and in October 1999.

With mortgage rates holding steady below the 8 percent mark, builders, however, say they feel good about future sales.

By region, the South registered the most strength with housing starts rising 7.6 percent to a seasonally adjusted annual rate of 719,000. In the Midwest, starts rose 6.7 percent to a rate of 320,000. But in the West, starts tumbled by 16 percent to a rate of 338,000 and in the Northeast they fell by 3.1 percent to a rate of 155,000.

New building permits, a sign of future construction activity, rose a solid 1.3 percent to a rate of 1.53 million.