Housing starts rose 6.2% in April

May 17, 1991|By Knight-Ridder News Service

WASHINGTON -- Gains in three of four regions drove housing starts up 6.2 percent last month, to an annual rate of 957,000 units, the Commerce Department reported yesterday.

However, permits to build new houses, a leading economic indicator, fell 3 percent last month, to an annualized 865,000 units, after gaining in February and March.

The increase in April housing starts followed a revised 9.2 percent decline in March to 901,000 units and a revised 17.1 percent gain in February to 992,000. Since a January low of 847,000 units, overall housing starts have gained 12.9 percent.

The 6.2 percent jump was seen by some economists as laying the foundation for an economic recovery.

Although the housing market is "coming off the floor, it isn't leaping off the floor," Robert Dederick at Northern Trust Bank in Chicago said, adding that any rebound is likely to be subdued.

Mr. Dederick noted that the starts rise was mostly fed by the single-family sector, generally the first component to react to a lowering of interest rates by the Federal Reserve.

The multifamily housing sector remains depressed, analysts said. Starts and permits for buildings of five units or more both declined in April.

Mark Obrinsky, economist at the Federal National Mortgage Association in Washington, said that vacancy rates still were high, which could keep starts for multifamily units down at record lows.

Nevertheless, Mr. Obrinsky said the housing starts report showed the industry was "back on the track of a gradual increase."

Carol Stone, an economist with Nomura Securities International Inc. in New York, offered a less optimistic view. Ms. Stone said that although last month's housing data suggested the market was not getting any worse, there was no "major sign that there's a major recovery" under way.

"There is no sustained strength in this industry," she said.

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