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Housing starts fall 5.5%
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September 18, 1998: 9:42 a.m. ET
New home building in August slowed sharply, reversing July's surge
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NEW YORK (CNNfn) - Reversing the recent surge in new home construction, housing starts in August recorded their largest percentage drop in nearly two years, but managed to remain strong against year-ago figures, the Commerce Department reported Friday.
New home construction on a seasonally adjusted basis fell 5.5 percent in August to an annual rate of 1.61 million units. The figure stands in stark contrast to July, when starts climbed a revised 5.3 percent, the biggest gain in more than a decade.
The August results, still almost 17 percent higher than last year's, fell below analysts' estimates of 1.65 million units.
They also represent the largest monthly percentage drop since December 1996, when housing starts plunged 7.2 percent.
The recent upturn in building construction is being driven largely by low interest rates, analysts say, which makes mortgages more affordable to home buyers.
Reaction to the data in the bond market was muted Friday morning, with the 30-year Treasury issue down 1/32, for a yield of 5.17 percent.
On the heels of a 16-percent jump in July, apartment construction dropped 9.6 percent last month to an annual rate of 368,000 units.
At the same time, single-family home construction fell 4.2 percent in August to a rate of 1.25 million a year, after climbing 2.4 percent rise in July. 
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Department of Commerce
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