Housing To Boost Economy In 1997

Housing is likely to be a positive force for the economy in early 1997 as a result of lower mortgage rates, higher personal incomes and strong consumer confidence.

Although analysts expect U.S. economic growth to decelerate next year from the 3.0 percent annual pace seen so far in 1996, housing will help keep the economy afloat. “Rates are stable, jobs are stable and prices are stable,” said Ted Mahoney, president of Windjammer Construction in Plainville, Maine. “For a builder, there are good opportunities. It’s been a good year, and I think next year will be good too.”

A recent pause in home sales and housing starts has done little to dampen builder optimism. And expectations about U.S. interest rate policy certainly don’t hurt that outlook. The Federal Reserve left interest rates unchanged at its policy meeting last week, and economists expect the Fed to leave rates alone into early 1997.