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Housing market rebounds
©Associated Press WASHINGTON -- Home builders last month broke ground on the largest number of projects since July, as low mortgage rates and mild weather helped the housing market remain a bright spot in the gloomy economy. The Commerce Department reported Tuesday that housing construction rose to a seasonally adjusted annual rate of 1.65-million housing units in November, an 8.2 percent increase over the prior month. The percentage increase marked the biggest one-month gain since January and pushed housing starts to the highest level since July, when they grew to a rate of 1.66-million units. Monthly housing construction data are not available at the state or local level. But those familiar with the Tampa Bay area housing scene said the local market appears strong. Tony Polito, Tampa Bay area director of American Metro Study Corp., a real estate research company based in Houston, said job growth continues to drive bay area housing construction. He cited the results of a recent Labor Department study, which found the bay area added jobs faster during the 12 months ended October 2001 than any other metropolitan area in the United States. "Discussions with the builders have been pretty positive, and contract pace is still holding," Polito said. Joseph Narkiewicz, executive vice president of the Builders Association of Greater Tampa, said low interest rates have helped sustain the market locally and nationwide. He added that the local market recovered quickly from the pall cast by the Sept. 11 terrorist attacks. "For about two weeks, traffic in model centers slowed substantially," he said. "But the buying public came back, and it seems as if traffic and sales are back up to normal levels." November's rebound came after housing starts nationwide fell a revised 4 percent in October, a larger drop than the government previously reported. The stronger than expected performance last month occurred even as consumer confidence fell to a 71/2-year low in November and the employment picture worsened. The nation's unemployment rate climbed from 5.4 percent to 5.7 percent and payrolls fell sharply. Low mortgage rates are a key reason that the housing and construction markets have remained stable even as the national economy has been suffering through a recession since March. The average interest rate on a 30-year fixed-rate mortgage was 6.7 percent in November, compared with 7.7 percent for the same month a year ago. In early November, mortgage company Freddie Mac reported, rates dipped to 6.45 percent, the lowest level in 30 years of record-keeping. Since then, rates have moved higher, rising to 7.09 percent last week. "Home buyers likely rushed to take advantage of low rates before they moved higher," Merrill Lynch economist Karen Dexter said. "Warm weather also contributed to the jump." Builders said low interest rates and solid appreciation in housing values are motivating new home buyers. A survey released Monday by the National Association of Home Builders cited those factors as reasons that builders are more optimistic about sales prospects for December and the next six months. To lure prospective buyers, more home builders are offering incentives, such as including some options at a discount or no charge and paying for buyers' closing costs, said David Seiders, the association's chief economist. In November, construction of single-family homes rose 3.2 percent to a rate of 1.26-million units, after registering a 3.4 percent decline the month before. Construction of apartments, condominiums and other multifamily housing soared 30.1 percent to a rate of 346,000, following a 2.9 percent drop in October. By region, housing starts rose 20.1 percent in the Northeast to a rate of 173,000. In the Midwest, they grew 20.5 percent to a rate of 382,000, and in the West, starts rose 12.7 percent to a rate of 372,000. In the South, however, they fell 1.6 percent to a rate of 718,000. "A few months from now these housing starts are going to require appliances and furnishings," said Ken Mayland, economist with ClearView Economics. "This is all to the good for the economy." Economists are hopeful that the Federal Reserve's 11 interest rate reductions this year will induce consumers to spend and businesses to invest, setting the stage for an economic recovery next year. "The housing market is one of the main barometers for the entire economy, and it's one of the few aspects of the economy that's still performing well," Narkiewicz of the Builders Association of Greater Tampa said. "If it can remain strong, it will help bring the rest of the economy back into gear." - Times staff writer Scott Barancik contributed to this report.
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From the Times Business report Robert Trigaux
From the AP
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