April housing starts unexpectedly fell 2.3% But the annual rate stayed above 1.5 million for 8th month in row


May 20, 1998|By BLOOMBERG NEWS

WASHINGTON -- U.S. builders began construction on fewer houses in April, the Commerce Department said yesterday, in a sign that the economy is expected to cool from its first-quarter pace.

Housing starts unexpectedly fell 2.3 percent last month to a 1.538 million-unit annual rate, the government said. In March, housing starts fell 2.5 percent to a 1.575 million rate.

Analysts had expected an increase in starts last month. Even so, April marked the eighth straight month that starts exceeded 1.5 million at an annual rate -- the longest stretch at that pace since a run from May 1983 through November 1987.

The housing market this year has enjoyed the benefits of low mortgage rates, growing incomes, job gains and high consumer optimism.

Housing starts surged in February to a 1.616 million-unit rate, the highest level since January 1989. As long as housing demand stays robust, consumers will continue to purchase appliances and furniture to fill their new homes, analysts said.

One of the big beneficiaries of the boom is the home-improvement industry. "Renovations, reconstruction, additions and improvements will carry the housing industry and the economy," said Richard Yamarone, senior economist at Argus Research Corp. in New York.

Construction starts of multifamily buildings fell 13.4 percent in April, while starts of single-family homes rose 0.7 percent, government figures showed.

The report also showed that permits for new home construction, often viewed as a barometer of groundbreaking, fell 3.3 percent to a 1.518 million annual rate in April after falling 4.0 percent in March.

Pub Date: 5/20/98

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