U.S. Housing Starts Jump To 16-Year High

By Agence France-Presse Groundbreaking on construction of new U.S. homes unexpectedly shot to a 16-year high in December of last year, the U.S. Commerce Department said Jan. 21. Economists had been expecting a slight fall. The number of housing starts surged 5% from the previous month to a seasonally adjusted annual rate of 1.835 million homes, the highest figure since June 1986, the Commerce Department said. When compared with December 2001, the number of housing starts was up 15.9%. "Obviously it was stronger than the market expected," says Jay Bryson, Wachovia Corp. global economist. "In general, this is a sign of continued underlying strength in the housing market. It may be partially affected by some better-than-expected weather in December, but in general it is a very strong number and we continue to expect the housing market to be relatively strong . . . just given the low level of interest rates here." The number of homes granted a building permit leapt 8.2% from the previous month to a seasonally adjusted annual rate of 1.88 million, the highest level since December 1986. Building permits were up 10.5% from December 2001. "Residential construction has been one of the sectors that has helped prop up the economy over the past two years or so . . . ," notes Bryson. A breakdown of the figures showed starts on single-family housing projects rose 4.9% to an annual rate of 1.473 million homes in December, the highest since November 1978. Starts on multiple-family projects rose 3.9% to 321,000. In November, housing starts overall had climbed 5.2% to a seasonally adjusted annual rate of 1.747 million, up from the initial estimate of a 2.4% rise. Copyright Agence France-Presse, 2003