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Housing construction rises 1.7 percent in September
Associated Press WriterWASHINGTON (AP) -- 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.
The Commerce Department reported Wednesday that builders broke ground on 1.57 million housing units at a seasonally adjusted annual rate last month, a 1.7 percent increase. That followed a sharp 6.7 percent drop in August.
Many analysts were expecting housing starts to fall by around 2 percent in September on the belief that builders would hold off on new projects, given new economic uncertainties created by the Sept. 11 attacks.
In their aftermath, layoffs have rocketed, retail sales have plunged and consumer and business confidence in the economy have been badly shaken.
In September, single-family home construction increased by 0.6 percent to a seasonally adjusted annual rate of 1.27 million. Construction of condominiums, apartments and other multifamily housing rose by 2.7 percent to a rate of 270,000.
By region, housing starts jumped by 12.5 percent in the West to a rate of 423,000 and they were up by 7.6 percent in the South to a rate of 732,000. But in the Midwest, starts plunged by 16.6 percent to a rate of 282,000; in the Northeast they declined by 11 percent to a rate of 137,000.
Housing activity, aided by low interest rates, has helped to support the nation's economy during its more than yearlong slump.
Last week the average interest rate on 30-year fixed-rate mortgages fell to 6.58 percent, the ninth week in a row that 30-year mortgages were below the 7 percent mark, according to the nationwide survey by Freddie Mac, the mortgage company.
Even against the backdrop of low interest rates, the National Association of Home Builders, in a survey released Tuesday, 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 Sept. 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," Smith said.
Housing permits, a good barometer of demand, fell by 3 percent in September to a rate of 1.52 million, the lowest level since December 1997.
To help jump-start the economy, the Federal Reserve has cut interest rates nine times this year, with two reductions coming after the attacks on the World Trade Center and Pentagon. President Bush and Congress are also working on a package to aid the economy that probably will include tax cuts and increased government spending.