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Housing starts tumble
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October 21, 1998: 9:35 a.m. ET
New home construction falls 2.5 % in September; permits plummet
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NEW YORK (CNNfn) - Housing construction activity slowed far more than expected last month while permit applications fell to their lowest point in nearly four years, the Commerce Department reported Wednesday.
New home construction on a seasonally adjusted basis fell an unexpected 2.5 percent in September to an annual rate of 1.576 million units after a revised downturn of 5.2 percent in August, to 1.62 million units on an annual basis.
Both figures are down from July's high rate of 1.7 million units.
Economists predicted the annual rate of housing starts would reach 1.63 million in September.
The bond market had little reaction to the news, with the benchmark 30-year Treasury bond up 1/32 for a yield of 5.066 percent.
According to the Commerce Department, applications for new building permits fell 4.5 percent last month to a rate of 1.55 million, the largest month decline since January 1995.
Rates on 30-year mortgages in September dropped to a 6.72 percent average from 6.92 percent in August.
By region, housing starts were down 3.6 percent in the Northeast to 135,000 a year during September and off 8.6 percent in the South to 709,000. Starts increased, however, 5.6 percent to an annual rate of 414,000 in the West and were up 3.2 percent in the Midwest for a rate of 318,000.
The news comes on the heels of Tuesday's bleak outlook for future home buying activity by the National Association of Home Builders.
The group said its forward-looking October market index hit a new high, but it also reported a shrinking base of prospective home buyers. 
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