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Housing starts fall 2.7%
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December 16, 1998: 10:08 a.m. ET
New home starts totaled 1.649M in November; industrial output eased 0.3%
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NEW YORK (CNNfn) - The pace of new home building fell dramatically in November, but economists portrayed the decline as a natural taper on the heels of a strong surge in October. Meanwhile single-family home construction soared to a nearly 15-year high.
November housing starts -- the number of new housing units workers began building last month -- fell 2.7 percent to an annual rate of 1.649 million units, nearly double the 1.4 percent drop anticipated by economists and off sharply from October's revised 8 percent jump, the Commerce Department said Wednesday.
In a separate batch of economic data, industrial production, a key gauge of behavior in the business cycle, eased 0.3 percent in November after a 0.2 percent rise in October, the Federal Reserve reported.
Economists had forecast a 0.4 percent decline. Capacity utilization was a seasonally adjusted 80.6 percent, down from 81.2 percent in October.
New building permits, defined as new housing permits authorized by local governments, fell 2.3 percent to an annual rate of 1.651 million units in November.
Single family home starts totaled 1.353 million units, their highest level since February 1984, when 1.4 million new units began construction.
Taken regionally, the sharpest decline in November was in the Midwest, where housing starts eased 7.2 percent to an annualized rate of 324,000, followed by the South, which experienced a 6.5 percent drop to 772,000 units. Starts in the Northeast slid 5.6 percent to 152,000. The lone regional standout in November, the West showed a 12 percent surge to 401,000.
Economists say the Asian crisis has proven a boon to the U.S. housing market as cash inflows from safe-haven seekers have triggered a downturn in interest rates. The scenario is darker in other sectors, especially manufacturing, which have been hard hit by weakened Asian demand for U.S. exports.
Robert Brusca, chief economist at Nikko Securities, said the overall decline in housing starts belied a generally healthy economic landscape, marked by low interest rates and mortgages.
"We are coming off of very strong numbers, and I don't think we'd want to say bad things about the housing market on the basis of these numbers alone," Brusca said.
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